Horizontal Analysis of the Income Statement Income statement data for Boone Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $550,000 $665,500 542,800 Cost of goods sold 460,000 590,000 $122,700 $34,410 $31,000 Gross profit Selling expenses Administrative expenses Total operating expenses Income before income tax 30,940 26,000 565,350 $57,000 $33,000 557.350 22.900 Income tax expenses 13,200 Net income $34,450 $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. Sales Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent 5665.500 $550,000 % 542,800 460,000 % $122,700 $90,000 $ $ 96 34,410 31,000 90 30,940 26,000 96 Cost of goods sold Gross profit Selling expenses Administrative expenses $57,000 s % $33,000 s % Total operating expenses $65,350 Income before income tax $57,350 Income tax expense 22,900 Net income $34,450 13,200 % $19,800 999 b. The net income for Boone Company increased by 74% between years. This increase was the combined result of an in sales of 21% and goods sold. 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 than the percentage increase in sales