Horizontal analysis of income statement

For 20Y2, 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, 20Y2 and 20Y1

Line Item Description	20Y2	20Y1
Sales	$726,988	$646,000
Cost of goods sold	(516,600)	(410,000)
Gross profit	$210,388	$236,000
Selling expenses	$(71,550)	$(54,000)
Administrative expenses	(41,960)	(34,000)
Total operating expenses	$(113,510)	$(88,000)
Operating income	$96,878	$148,000
Other revenue	3,289	2,700
Income before income tax expense	$100,167	$150,700
Income tax expense	(28,000)	(45,200)
Net income	$72,167	$105,500

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 "Increase/(Decrease)" columns. If required, round percentages to one decimal place.

Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1

Line Item Description	20Y2	20Y1	Increase/ (Decrease) Amount	Increase/ (Decrease) Percent
Sales	$726,988	$646,000	$	_____%
Cost of goods sold	(516,600)	(410,000)	$	%
Gross profit	$210,388	$236,000	$	%
Selling expenses	$(71,550)	$(54,000)	$	%
Administrative expenses	(41,960)	(34,000)		%
Total operating expenses	$(113,510)	$(88,000)	$	%
Operating income	$96,878	$148,000	$	%
Other revenue	3,289	2,700		%
Income before income tax expense	$100,167	$150,700	$	%
Income tax expense	(28,000)	(45,200)		%
Net income	$72,167	$105,500	$	%

2. Net income has increased or decreased from 20Y1 to 20Y2. Sales have increased or decreased; however, the cost of goods sold has increased or decreased

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

.