Horizontal Analysis of Income Statement

For 20Y2, 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:

McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$491,700		$418,000
Cost of goods sold	353,600		260,000
Gross profit	$138,100		$158,000
Selling expenses	$50,750		$35,000
Administrative expenses	29,130		22,000
Total operating expenses	$79,880		$57,000
Income from operations	$58,220		$101,000
Other revenue	2,250		1,800
Income before income tax	$60,470		$102,800
Income tax expense	16,900		30,800
Net income	$43,570		$72,000

Required:

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. Use the minus sign to indicate a decrease in the "Increase (Decrease)" columns.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$491,700	$418,000	$	%
Cost of goods sold	353,600	260,000		%
Gross profit	$138,100	$158,000	$	%
Selling expenses	$50,750	$35,000	$	%
Administrative expenses	29,130	22,000		%
Total operating expenses	$79,880	$57,000	$	%
Income from operations	$58,220	$101,000	$	%
Other revenue	2,250	1,800		%
Income before income tax	$60,470	$102,800	$	%
Income tax expense	16,900	30,800		%
Net income	$43,570	$72,000	$	%

2. Net income has from 20Y1 to 20Y2. Sales have ; however, the cost of goods sold has , causing the gross profit to .