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 Cost of goods sold $660,000 560,000 Gross profit $838,200 694,400 $143,800 $42,120 37,500 $100,000 Selling expenses $36,000 Administrative expenses 30,000 Total operating expenses $66,000 Income before income tax $79,620 $64,180 25,700 $34,000 13,600 Income tax expenses Net income $38,480 $20,400 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 $838,200 $660,000 $ 694,400 560,000 Sales Cost of goods sold Gross profit $143,800 Selling expenses $42,120 37,500 Administrative expenses $100,000 $ $36,000 30,000 $66,000 $34,000 $ 13,600 Total operating expenses $79,620 Income before income tax $64,180 25,700 Income tax expense Net income $38,480 $20,400 $ b. The net income for Winthrop Company increased between years. This increase was the combined result of an in sales and The cost of goods sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be percentage in cost of goods sold. than the percentage increase in sales