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	$352,096		$294,000
Cost of goods sold	266,000		190,000
Gross profit	$86,096		$104,000
Selling expenses	$37,500		$25,000
Administrative expenses	21,760		16,000
Total operating expenses	$59,260		$41,000
Income from operations	$26,836		$63,000
Other revenue	1,493		1,200
Income before income tax	$28,329		$64,200
Income tax expense	7,900		19,300
Net income	$20,429		$44,900

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	$352,096	$294,000	$	%
Cost of goods sold	266,000	190,000		%
Gross profit	$86,096	$104,000	$	%
Selling expenses	$37,500	$25,000	$	%
Administrative expenses	21,760	16,000		%
Total operating expenses	$59,260	$41,000	$	%
Income from operations	$26,836	$63,000	$	%
Other revenue	1,493	1,200		%
Income before income tax	$28,329	$64,200	$	%
Income tax expense	7,900	19,300		%
Net income	$20,429	$44,900	$	%

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