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	$434,720		$370,000
Cost of goods sold	312,800		230,000
Gross profit	$121,920		$140,000
Selling expenses	$44,950		$31,000
Administrative expenses	26,480		20,000
Total operating expenses	$71,430		$51,000
Income from operations	$50,490		$89,000
Other revenue	2,038		1,600
Income before income tax	$52,528		$90,600
Income tax expense	14,700		27,200
Net income	$37,828		$63,400

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	$434,720	$370,000	$	%
Cost of goods sold	312,800	230,000		%
Gross profit	$121,920	$140,000	$	%
Selling expenses	$44,950	$31,000	$	%
Administrative expenses	26,480	20,000		%
Total operating expenses	$71,430	$51,000	$	%
Income from operations	$50,490	$89,000	$	%
Other revenue	2,038	1,600		%
Income before income tax	$52,528	$90,600	$	%
Income tax expense	14,700	27,200		%
Net income	$37,828	$63,400	$	%

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