2012 Horizontal analysis of income statement For 2012, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative Income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 2041 20Y1 Sales $ 16,800,000 $ 15,000,000 Cost of goods sold (11,500,000) (10,000,000) Gross profit $ 5,300,000 $5,000,000 Selling expenses $ (1,770,000) $ (1,500,000) Administrative expenses (1,220,000) (1,000,000) Total operating expenses $ (2,990,000) $(2,500,000) Operating income $ 2,310,000 $ 2,500,000 Other revenue 256,950 225,000 Income before income tax expense $ 2,566,950 $ 2,725,000 Income tax expense (1,413,000) (1,500,000) Net Income $ 1,153,950 $1,225,000 1. Prepare a comparative Income statement with horizontal analysis for the two-year period, using 2011 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 2011 Increase/(Decrease) 2012 2011 Amount Percent McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 2011 Increase/(Decrease) 2012 2011 Amount Sales Cost of goods sold Percent % 96 Gross profit % Selling expenses Administrative expenses % 96 Total operating expenses % Operating income % Other rev Income before income tax expenses Income tax expense 996 Net income W 2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1) Net income has from 2071 to 2012. Sales have ; however, the cost of goods sold has causing the gross profit to increase ata pace thon sales. In addition, total operating expenses have at a faster rate than sales in costs and expenses that are higher than the increase in sales have caused the net income to