Horizontal analysis of income statement For 2012, 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: Sales McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 20Y1 Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax expense Income tax expense Net income 2012 $16,000,000 (11,500,000) $5.300,000 $ (1,770,000) (1.220,000) $ (2,990,000) 2011 $15,000,000 (10,000,000) $5,000,000 $ (1,500,000) (1,000,000) $(2,500,000) $2,310,000 256,950 $2,500,000 225,000 $2,566,950 $2,725,000 (1.413,000) (1,500,000) $1.153,950 $1.225,000 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the bese year. Round percentages to one decimal place. For these boxes in which you must enter subtracted or negative numbers use a minus sign McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 201 Sales Cost of goods sold Gross profit Selling expenses 2012 2011 Increase/(Decrease) Amount Percent 00001 Previous Next Income tax expense Net income (1.413,000) (1,500,000) $1,153,950 $1,225,000 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign McDade Company Comparative Income Statement For the Years Ended December 31, 2012 and 2011 Sales Cost of goods sold 2012 20Y1 Increase/(Decrease) Amount Percent % % Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax expense Income tax expense Net income 2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1) Net income has profit to increase at a however, the cost of goods sold has from 2011 to 2012, Sales have pace than sales. In addition, total operating expenses have causing the gress at a faster rate that sales in costs and expenses that are higher than the increase in sales have caused the net income to