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	$565,353		$513,000
Cost of goods sold	390,400		320,000
Gross profit	$174,953		$193,000
Selling expenses	$54,830		$43,000
Administrative expenses	32,350		27,000
Total operating expenses	$87,180		$70,000
Income from operations	$87,773		$123,000
Other income	2,774		2,200
Income before income tax	$90,547		$125,200
Income tax expense	25,400		37,600
Net income	$65,147		$87,600

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	$565,353	$513,000	$	%
Cost of goods sold	390,400	320,000		%
Gross profit	$174,953	$193,000	$	%
Selling expenses	$54,830	$43,000	$	%
Administrative expenses	32,350	27,000		%
Total operating expenses	$87,180	$70,000	$	%
Income from operations	$87,773	$123,000	$	%
Other income	2,774	2,200		%
Income before income tax	$90,547	$125,200	$	%
Income tax expense	25,400	37,600		%
Net income	$65,147	$87,600	$	%

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