Horizontal analysis of the income statement OBJ. 1 Income statement data for Moreno Company for two recent years ended December 31, are as follows:

Current Year Previous Year Sales $1,120,000 $1,000,000 Cost of goods sold 971,250 875,000 Gross profit $ 148,750 $ 125,000 Selling expenses $ 71,250 $ 62,500 Administrative expenses 56,000 50,000 Total operating expenses $ 127,250 $ 112,500 Income before income tax $ 21,500 $ 12,500 Income tax expense 8,000 5,000 Net income $ 13,500 $ 7,500

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round to one decimal place.

b. What conclusions can be drawn from the horizontal analysis?