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
	20Y2		20Y1
Sales	$624,050		$560,000
Cost of goods sold	(434,000)		(350,000)
Gross profit	$190,050		$210,000
Selling expenses	$(61,100)		$(47,000)
Administrative expenses	(36,480)		(30,000)
Total operating expenses	$(97,580)		$(77,000)
Operating income	$92,470		$133,000
Other revenue	2,940		2,400
Income before income tax expense	$95,410		$135,400
Income tax expense	(26,700)		(40,600)
Net income	$68,710		$94,800

Required:

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
	20Y2	20Y1	Increase/ (Decrease) Amount	Increase/ (Decrease) Percent
Sales	$624,050	$560,000
Cost of goods sold	(434,000)	(350,000)
Gross profit	$190,050	$210,000
Selling expenses	$(61,100)	$(47,000)
Administrative expenses	(36,480)	(30,000)
Total operating expenses	$(97,580)	$(77,000)
Operating income	$92,470	$133,000
Other revenue	2,940	2,400
Income before income tax expense	$95,410	$135,400
Income tax expense	(26,700)	(40,600)
Net income	$68,710	$94,800

2. Net income has _____________ from 20Y1 to 20Y2. Sales have __________- ; however, the cost of goods sold has ___________ at a faster rate than sales, causing the gross profit to ___________ (fill in the blanks with increase or decrease) .