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	$647,570		$551,000
Cost of goods sold	476,000		350,000
Gross profit	$171,570		$201,000
Selling expenses	$66,700		$46,000
Administrative expenses	38,400		29,000
Total operating expenses	$105,100		$75,000
Income from operations	$66,470		$126,000
Other income	2,921		2,300
Income before income tax	$69,391		$128,300
Income tax expense	19,400		38,500
Net income	$49,991		$89,800

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 "Difference" columns. If required, round to one decimal place.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$647,570	$551,000	$	%
Cost of goods sold	476,000	350,000		%
Gross profit	$171,570	$201,000	$	%
Selling expenses	$66,700	$46,000	$	%
Administrative expenses	38,400	29,000		%
Total operating expenses	$105,100	$75,000	$	%
Income from operations	$66,470	$126,000	$	%
Other income	2,921	2,300		%
Income before income tax	$69,391	$128,300	$	%
Income tax expense	19,400	38,500		%
Net income	$49,991	$89,800	$	%

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