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 $462,500 $370,000 Cost of goods sold 381,300 310,000 Gross profit $81,200 $60,000 Selling expenses $23,000 $20,000 Administrative expenses 20,910 17,000 Total operating expenses $43,910 $37,000 Income before income tax $37,290 $23,000 Income tax expenses 14,900 9,200 Net income $22,390 $13,800

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 $462,500 $370,000 Cost of goods sold 381,300 310,000 Gross profit $81,200 $60,000 Selling expenses $23,000 $20,000 Administrative expenses 20,910 17,000 Total operating expenses $43,910 $37,000 Income before income tax $37,290 $23,000 Income tax expenses 14,900 9,200 Net income $22,390 $13,800 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. Boone Company Comparative Income Statement For the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $462,500 $370,000 $ % Cost of goods sold 381,300 310,000 % Gross profit $81,200 $60,000 $ % Selling expenses 23,000 20,000 % Administrative expenses 20,910 17,000 % Total operating expenses $43,910 $37,000 % Income before income tax $37,290 $23,000 % Income tax expense 14,900 9,200 % Net income $22,390 $13,800 % in sales of 25% and b. The net income for Boone Company increased by 62.2% between years. This increase was the combined result of an percentage in cost of goods sold. The cost of goods sold increased at a thus causing the percentage increase in gross profit to be than the percentage increase in sales. rate than the increase in sales