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 merchandise sold Gross profit Selling expenses $755,200 $590,000 630,000 500,000 $125,200 $90,000 $36,580 $31,000 Administrative expenses 32,760 26,000 Total operating expenses $69,340 $57,000 Income before income tax expense $55,860 $33,000 Income tax expenses Net income 22,300 $33,560 13,200 $19,800 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 Sales year Amount $755,200 $590,000 $ Previous Increase Increase year (Decrease) (Decrease) Amount Amount Percent % Cost of merchandise sold 630,000 500,000 % Gross profit $125,200 $90,000 % Selling expenses $36,580 Administrative expenses 32,760 $31,000 $ 26,000 % % Total operating expenses $69,340 $57,000 % Income before income tax expense $55,860 $33,000 $ % Income tax expense 22,300 13,200 % Net income $33,560 $19,800 % b. The net income for Winthrop Company increased between years. This increase was the combined result of an percentage increase in gross profit to be than the percentage increase in sales. in sales and percentage in cost of merchandise sold. The cost of merchandise sold increased at al rate than the increase in sales, thus causing the