For 20Y2, 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, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$503,844		$418,000
Cost of goods sold	369,200		260,000
Gross profit	$134,644		$158,000
Selling expenses	$53,380		$35,000
Administrative expenses	30,320		22,000
Total operating expenses	$83,700		$57,000
Income from operations	$50,944		$101,000
Other income	2,336		1,800
Income before income tax	$53,280		$102,800
Income tax expense	14,900		30,800
Net income	$38,380		$72,000

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 "Difference" columns. If required, round to one decimal place.

	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$503,844	$418,000	$fill in the blank eedfd2fdb041fa1_1	fill in the blank eedfd2fdb041fa1_2%
Cost of goods sold	369,200	260,000	fill in the blank eedfd2fdb041fa1_3	fill in the blank eedfd2fdb041fa1_4%
Gross profit	$134,644	$158,000	$fill in the blank eedfd2fdb041fa1_5	fill in the blank eedfd2fdb041fa1_6%
Selling expenses	$53,380	$35,000	$fill in the blank eedfd2fdb041fa1_7	fill in the blank eedfd2fdb041fa1_8%
Administrative expenses	30,320	22,000	fill in the blank eedfd2fdb041fa1_9	fill in the blank eedfd2fdb041fa1_10%
Total operating expenses	$83,700	$57,000	$fill in the blank eedfd2fdb041fa1_11	fill in the blank eedfd2fdb041fa1_12%
Income from operations	$50,944	$101,000	$fill in the blank eedfd2fdb041fa1_13	fill in the blank eedfd2fdb041fa1_14%
Other income	2,336	1,800	fill in the blank eedfd2fdb041fa1_15	fill in the blank eedfd2fdb041fa1_16%
Income before income tax	$53,280	$102,800	$fill in the blank eedfd2fdb041fa1_17	fill in the blank eedfd2fdb041fa1_18%
Income tax expense	14,900	30,800	fill in the blank eedfd2fdb041fa1_19	fill in the blank eedfd2fdb041fa1_20%
Net income	$38,380	$72,000	$fill in the blank eedfd2fdb041fa1_21	fill in the blank eedfd2fdb041fa1_22%

Question Content Area

2. Net income has

increaseddecreased

from 20Y1 to 20Y2. Sales have

increaseddecreased

; however, the cost of goods sold has

increaseddecreased

, causing the gross profit to

increasedecrease

.