Horizontal Analysis of Income Statement For 2012, 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: Sales Cost of goods sold Macklin Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 20Y1 Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue 2012 2011 $457,046 $389,000 (340,000) (250,000) $117,046 $139,000 $(47,850) $(33,000) (27,800) (21,000) $(75,650) $(54,000) $41,396 $85,000 2,038 1,600 $43,434 $86,600 (12,200) $31,234 (26,000) $60,600 Income before income tax expense Income tax expense Net income Required: 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 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, 2012 and 20Y1 Sales 2012 2011 $457,046 $389,000 Increase/ (Decrease) Amount Increase/ (Decrease) Percent x x% Cost of goods sold (340,000) (250,000) x x % Gross profit $117,046 $139,000 x x % Selling expenses $(47,850) $(33,000) x X% Administrative expenses (27,800) (21,000) x X % Total operating expenses $(75,650) $(54,000) x x % Operating income $41,396 $85,000 x x % Other revenue 2,038 1,600 x X % Income before income tax expense $43,434 $86,600 S x x % Income tax expense (12,200) (26,000) x x % Net income $31,234 $60,600 x X% 2. Net income has decreased from 2011 to 2012. Sales have increased however, the cost of goods sold has increased at a faster rate than sales, causing the gross profit to decrease .