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	$442,700		$380,000
Cost of goods sold	321,600		240,000
Gross profit	$121,100		$140,000
Selling expenses	$45,600		$32,000
Administrative expenses	26,120		20,000
Total operating expenses	$71,720		$52,000
Income from operations	$49,380		$88,000
Other income	2,024		1,600
Income before income tax	$51,404		$89,600
Income tax expense	14,400		26,900
Net income	$37,004		$62,700

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	$442,700	$380,000	$fill in the blank 45bcb0010ffe008_1	fill in the blank 45bcb0010ffe008_2%
Cost of goods sold	321,600	240,000	fill in the blank 45bcb0010ffe008_3	fill in the blank 45bcb0010ffe008_4%
Gross profit	$121,100	$140,000	$fill in the blank 45bcb0010ffe008_5	fill in the blank 45bcb0010ffe008_6%
Selling expenses	$45,600	$32,000	$fill in the blank 45bcb0010ffe008_7	fill in the blank 45bcb0010ffe008_8%
Administrative expenses	26,120	20,000	fill in the blank 45bcb0010ffe008_9	fill in the blank 45bcb0010ffe008_10%
Total operating expenses	$71,720	$52,000	$fill in the blank 45bcb0010ffe008_11	fill in the blank 45bcb0010ffe008_12%
Income from operations	$49,380	$88,000	$fill in the blank 45bcb0010ffe008_13	fill in the blank 45bcb0010ffe008_14%
Other income	2,024	1,600	fill in the blank 45bcb0010ffe008_15	fill in the blank 45bcb0010ffe008_16%
Income before income tax	$51,404	$89,600	$fill in the blank 45bcb0010ffe008_17	fill in the blank 45bcb0010ffe008_18%
Income tax expense	14,400	26,900	fill in the blank 45bcb0010ffe008_19	fill in the blank 45bcb0010ffe008_20%
Net income	$37,004	$62,700	$fill in the blank 45bcb0010ffe008_21	fill in the blank 45bcb0010ffe008_22%

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