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 $350,000 $280,000 292,800 240,000 $40,000 Cost of goods sold Gross profit Selling expenses Administrative expenses $57,200 $16,100 14,760 $30,860 Total operating expenses Income before income tax $14,000 12,000 $26,000 $14,000 5,600 Income tax expenses $26,340 10,500 $15,840 Net Income 38,400 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. Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount increase (Decrease) Percent Sales $350,000 $280,000 Cost of goods sold 292,800 240,000 Gross profit $57,200 $40,000 lino SA 15 Income tax expenses 10,500 5,600 Net Income $15,840 $8,400 a. Prepare a comparative Income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous yea required, round to one decimal place, Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount increase (Decrease) Percent Sales $350,000 $280,000 % Cost of goods sold 292,800 240,000 % Gross profit 557,200 $40,000 90 Selling expenses 16,100 14,000 90 Administrative expenses 14,760 12,000 Total operating expenses $30,860 $26,000 9 Income before income tax $26,340 $14,000 % Income tax expense 10,500 5,600 Net Income $15,840 $8,400 % b. The net income for Boone Company increased by 88.6% between years. This increase was the combined result of an increase in sales of 25% and highe percentage increase in cost of goods sold. The cost of goods sold increased at a slower mate than the increase in sales, thus causing the percentage ind in gross profit to be greater than the percentage increase in sales