Horizontal Analysis of Income Statement

For $20$Y$2,$ 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 $31,20$Y$2$ and $20$Y$1$

$20$Y$220$Y$1$

Sales $$374,988$ $$313,000$

Cost of merchandise sold $280,000200,000$

Gross profit $$94,988$ $$113,000$

Selling expenses $$39,000$ $$26,000$

Administrative expenses $23,12017,000$

Total operating expenses $$62,120$ $$43,000$

Income from operations $$32,868$ $$70,000$

Other revenue $1,6071,300$

Income before income tax expense $$34,475$ $$71,300$

Income tax expense $9,70021,400$

Net income $$24,775$ $$49,900$