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	$462,500			$370,000
Cost of merchandise sold	378,200			310,000
Gross profit	$84,300			$60,000
Selling expenses	$24,150			$21,000
Administrative expenses	22,140			18,000
Total operating expenses	$46,290			$39,000
Income before income tax expense	$38,010			$21,000
Income tax expenses	15,200			8,400
Net income	$22,810			$12,600

Question Content Area

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.

	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$462,500	$370,000	_____$	_____%
Cost of merchandise sold	378,200	310,000	_____$	_____%
Gross profit	$84,300	$60,000	_____$	_____%
Selling expenses	$24,150	$21,000	_____$	_____%
Administrative expenses	22,140	18,000	_____$	_____%
Total operating expenses	$46,290	$39,000	_____$	_____%
Income before income tax expense	$38,010	$21,000	_____$	_____%
Income tax expense	15,200	8,400	_____$	_____%
Net income	$22,810	$12,600	_____$	_____%