1. 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	$660,000			$500,000
   Cost of goods sold	541,800			420,000
   Gross profit	$118,200			$80,000
   Selling expenses	$36,600			$30,000
   Administrative expenses	32,500			25,000
   Total operating expenses	$69,100			$55,000
   Income before income tax	$49,100			$25,000
   Income tax expenses	19,600			10,000
   Net income	$29,500			$15,000

   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	$660,000	$500,000	$	%
   Cost of goods sold	541,800	420,000		%
   Gross profit	$118,200	$80,000	$	%
   Selling expenses	36,600	30,000		%
   Administrative expenses	32,500	25,000		%
   Total operating expenses	$69,100	$55,000	$	%
   Income before income tax	$49,100	$25,000	$	%
   Income tax expense	19,600	10,000		%
   Net income	$29,500	$15,000	$	%

   b. The net income for Boone Company increased by 96.7% between years. This increase was the combined result of an in sales of 32% 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.