For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 Line Item Description 20Y2 20Y1 Sales $709,344 $608,000 Cost of goods sold (509,200) (380,000) Gross profit $200,144 $228,000 Selling expenses $(72,680) $(51,000) Administrative expenses (41,790) (32,000) Total operating expenses $(114,470) $(83,000) Operating income $85,674 $145,000 Other revenue 3,206 2,600 Income before income tax expense $88,880 $147,600 Income tax expense (24,900) (44,300) Net income $63,980 $103,300 Required:

Question Content Area 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Use the minus sign to indicate a decrease in the "Increase/(Decrease)" columns. If required, round percentages to one decimal place.

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description

20Y2

20Y1 Increase/ (Decrease) Amount Increase/ (Decrease) Percent Sales $709,344 $608,000 $Sales Sales % Cost of goods sold (509,200) (380,000) Cost of goods sold Cost of goods sold % Gross profit $200,144 $228,000 $Gross profit Gross profit % Selling expenses $(72,680) $(51,000) $Selling expenses Selling expenses % Administrative expenses (41,790) (32,000) Administrative expenses Administrative expenses % Total operating expenses $(114,470) $(83,000) $Total operating expenses Total operating expenses % Operating income $85,674 $145,000 $Operating income Operating income % Other revenue 3,206 2,600 Other revenue Other revenue % Income before income tax expense $88,880 $147,600 $Income before income tax expense Income before income tax expense % Income tax expense (24,900) (44,300) Income tax expense Income tax expense % Net income $63,980 $103,300 $Net income Net income % Question Content Area 2. Net income has fill in the blank 1 of 4 from 20Y1 to 20Y2. Sales have fill in the blank 2 of 4 ; however, the cost of goods sold has fill in the blank 3 of 4 at a faster rate than sales, causing the gross profit to fill in the blank 4 of 4 .