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	$784,005		$655,000
Cost of merchandise sold	574,000		410,000
Gross profit	$210,005		$245,000
Selling expenses	$82,500		$55,000
Administrative expenses	47,600		35,000
Total operating expenses	$130,100		$90,000
Income from operations	$79,905		$155,000
Other revenue	3,520		2,800
Income before income tax expense	$83,425		$157,800
Income tax expense	23,400		47,300
Net income	$60,025		$110,500

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 "Difference" columns.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$784,005	$655,000	$fill in the blank 5feed0fc1030f84_1	fill in the blank 5feed0fc1030f84_2%
Cost of merchandise sold	574,000	410,000	fill in the blank 5feed0fc1030f84_3	fill in the blank 5feed0fc1030f84_4%
Gross profit	$210,005	$245,000	$fill in the blank 5feed0fc1030f84_5	fill in the blank 5feed0fc1030f84_6%
Selling expenses	$82,500	$55,000	$fill in the blank 5feed0fc1030f84_7	fill in the blank 5feed0fc1030f84_8%
Administrative expenses	47,600	35,000	fill in the blank 5feed0fc1030f84_9	fill in the blank 5feed0fc1030f84_10%
Total operating expenses	$130,100	$90,000	$fill in the blank 5feed0fc1030f84_11	fill in the blank 5feed0fc1030f84_12%
Income from operations	$79,905	$155,000	$fill in the blank 5feed0fc1030f84_13	fill in the blank 5feed0fc1030f84_14%
Other revenue	3,520	2,800	fill in the blank 5feed0fc1030f84_15	fill in the blank 5feed0fc1030f84_16%
Income before income tax expense	$83,425	$157,800	$fill in the blank 5feed0fc1030f84_17	fill in the blank 5feed0fc1030f84_18%
Income tax expense	23,400	47,300	fill in the blank 5feed0fc1030f84_19	fill in the blank 5feed0fc1030f84_20%
Net income	$60,025	$110,500	$fill in the blank 5feed0fc1030f84_21	fill in the blank 5feed0fc1030f84_22%

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