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 $967,500 $750,000 Cost of goods sold 812,800 640,000 Gross profit $154,700 $46,410 Selling expenses Administrative expenses $110,000 $39,000 32,000 40,640 $87,050 Total operating expenses Income before income tax $67,650 $71,000 $39,000 15,600 Income tax expenses 27,100 Net income $40,550 $23,400 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 $967,500 $750,000 $ % Sales Cost of goods sold 812,800 640,000 % Gross profit $154,700 $110,000 % Selling expenses $46,410 $39,000 % Administrative expenses 40,640 32,000 % Total operating expenses $87,050 $71,000 % Income before income tax $67,650 $39,000 $ % Income tax expense 27,100 15,600 % Net income $40,550 3,400 % 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 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 than the percentage increase in sales