16.7

Income statement data for Winthrop Company for two recent years ended December 31 are as follows:

	Current Year			Previous Year
Sales	$2,240,000			$2,000,000
Cost of goods sold	(1,925,000)			(1,750,000)
Gross profit	$315,000			$250,000
Selling expenses	$(152,500)			$(125,000)
Administrative expenses	(118,000)			(100,000)
Total operating expenses	$(270,500)			$(225,000)
Income before income tax expense	$44,500			$25,000
Income tax expense	(17,800)			(10,000)
Net income	$26,700			$15,000

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

Winthrop Company
Comparative Income Statement
For the Years Ended December 31
	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$2,240,000	$2,000,000	$fill in the blank eb98de03b02cf8d_1	fill in the blank eb98de03b02cf8d_2%
Cost of goods sold	(1,925,000)	(1,750,000)	fill in the blank eb98de03b02cf8d_3	fill in the blank eb98de03b02cf8d_4%
Gross profit	$315,000	$250,000	$fill in the blank eb98de03b02cf8d_5	fill in the blank eb98de03b02cf8d_6%
Selling expenses	$(152,500)	$(125,000)	fill in the blank eb98de03b02cf8d_7	fill in the blank eb98de03b02cf8d_8%
Administrative expenses	(118,000)	(100,000)	fill in the blank eb98de03b02cf8d_9	fill in the blank eb98de03b02cf8d_10%
Total operating expenses	$(270,500)	$(225,000)	$fill in the blank eb98de03b02cf8d_11	fill in the blank eb98de03b02cf8d_12%
Income before income tax expense	$44,500	$25,000	$fill in the blank eb98de03b02cf8d_13	fill in the blank eb98de03b02cf8d_14%
Income tax expense	(17,800)	(10,000)	fill in the blank eb98de03b02cf8d_15	fill in the blank eb98de03b02cf8d_16%
Net income	$26,700	$15,000	$fill in the blank eb98de03b02cf8d_17	fill in the blank eb98de03b02cf8d_18%