Figure 16-6 London Company provided the following income statements for its first three years of operation: Year 1 Year 2 Year 3 Net sales 975,000 1,150,000 1,280,000 (676,000) (910,000) (945,000) 240,000335,000 Less: cost of goods sold Gross margin 299,000 Less: (185,000) (215,000)(235,000) (45,600) (10,000) (40,000) 60,000 Operating expenses Income taxes Net income Problem 16-3 Refer to Figure 16-6. Prepare a horizontal analysis using year 1 as the base year. 68,400 15,000