Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31 are as follows: Current Year Previous Year Sales $786,500 $650,000 Cost of merchandise sold 649,000 550,000 Gruss point $137,500 $100,000 Seling expenses $37,740 $34,000 Administrative expenses 34,510 29,000 Total operating expenses $72,250 $63,000 Income before income tax expense $65,250 $37,000 Income tax expenses 26,100 14,800 Net Income $39,150 $22,200 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales 5786,500 5650,000 Cost of merchandise sold 649,000 550,000 Gross pront $137,500 $100,000 Selling expenses $37,740 534,000 Administrative expenses 34,510 29,000 Total operating expenses 572,250 $63,000 Income before income tax expense 565,250 $37,000 Income taxpens 26,100 14.800 Net income 339, 150 522 200 b. The net income for Winthrop Company increased between years. This increase was the combined result of an In sales and percentage in cost of merchandise sala. The cost of merchandise sold increased at a rate than the increase in sales, tras cousing the percentage increase in gross profit to be than the percentage increase in sales