Horizontal analysis of income statement

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

$20$Y$220$Y$1$

Sales $$443,580$ $$370,000$

Cost of goods sold $(322,000)(230,000)$

Gross profit $$121,580$ $$140,000$

Selling expenses $$(46,500)$ $$(31,000)$

Administrative expenses $(27,200)(20,000)$

Total operating expenses $$(73,700)$ $$(51,000)$

Operating income $$47,880$ $$89,000$

Other revenue $1,9541,600$

Income before income tax expense $$49,834$ $$90,600$

Income tax expense $(14,000)(27,200)$

Net income $$35,834$ $$63,400$

Required:

Question Content Area

$1.$ Prepare a comparative income statement with horizontal analysis for the two$-$year period, using $20$Y$1$ 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 $31,20$Y$2$ and $20$Y$1$

$20$Y$2$

$20$Y$1$ Increase$/$

$($Decrease$)$

Amount Increase$/$

$($Decrease$)$

Percent

Sales $$443,580$ $$370,000$ $fill in the blank $75$d$5$a$104601$dfef$\_1$

fill in the blank $75$d$5$a$104601$dfef$\_2$

$\%$

Cost of goods sold $(322,000)(230,000)$ fill in the blank $75$d$5$a$104601$dfef$\_3$

fill in the blank $75$d$5$a$104601$dfef$\_4$

$\%$

Gross profit $$121,580$ $$140,000$ $fill in the blank $75$d$5$a$104601$dfef$\_5$

fill in the blank $75$d$5$a$104601$dfef$\_6$

$\%$

Selling expenses $$(46,500)$ $$(31,000)$ $fill in the blank $75$d$5$a$104601$dfef$\_7$

fill in the blank $75$d$5$a$104601$dfef$\_8$

$\%$

Administrative expenses $(27,200)(20,000)$ fill in the blank $75$d$5$a$104601$dfef$\_9$

fill in the blank $75$d$5$a$104601$dfef$\_10$

$\%$

Total operating expenses $$(73,700)$ $$(51,000)$ $fill in the blank $75$d$5$a$104601$dfef$\_11$

fill in the blank $75$d$5$a$104601$dfef$\_12$

$\%$

Operating income $$47,880$ $$89,000$ $fill in the blank $75$d$5$a$104601$dfef$\_13$

fill in the blank $75$d$5$a$104601$dfef$\_14$

$\%$

Other revenue $1,9541,600$ fill in the blank $75$d$5$a$104601$dfef$\_15$

fill in the blank $75$d$5$a$104601$dfef$\_16$

$\%$

Income before income tax expense $$49,834$ $$90,600$ $fill in the blank $75$d$5$a$104601$dfef$\_17$

fill in the blank $75$d$5$a$104601$dfef$\_18$

$\%$

Income tax expense $(14,000)(27,200)$ fill in the blank $75$d$5$a$104601$dfef$\_19$

fill in the blank $75$d$5$a$104601$dfef$\_20$

$\%$

Net income $$35,834$ $$63,400$ $fill in the blank $75$d$5$a$104601$dfef$\_21$

fill in the blank $75$d$5$a$104601$dfef$\_22$

$\%$

Question Content Area

$2.$ Net income has

from $20$Y$1$ to $20$Y$2.$ Sales have

; however, the cost of goods sold has

at a faster rate than sales, causing the gross profit to

$.$

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