Income statement data for Moreno Company for two recent years ended December 31, are as follows:

Moreno Company

Comparative Income Statement

For the Years Ended December 31, 20--

1		Current Year	Previous Year
2	Sales	$1,120,000.00	$1,000,000.00
3	Cost of goods sold	971,250.00	875,000.00
4	Gross profit	$148,750.00	$125,000.00
5	Selling expenses	$71,250.00	$62,500.00
6	Administrative expenses	56,000.00	50,000.00
7	Total operating expenses	$127,250.00	$112,500.00
8	Income before income tax	$21,500.00	$12,500.00
9	Income tax expense	8,000.00	5,000.00
10	Net income	$13,500.00	$7,500.00

Required:

A.

Prepare a comparative income statement with horizontal analysis for the two-year period, indicating the increase (decrease) for the current year when compared with the previous year. Use the minus sign to indicate an amount or percent decrease. If required, round percentages to one decimal place.

B.

What conclusions can be drawn from the horizontal analysis?

Prepare a comparative income statement with horizontal analysis for the two-year period, indicating the increase (decrease) for the current year when compared with the previous year. Use the minus sign to indicate an amount or percent decrease. If required, round percentages to one decimal place.

Moreno Company

Comparative Income Statement

For the Years Ended December 31, 20--

1				Increase (Decrease)	Increase (Decrease)
2		Current Year	Previous Year	Amount	Percent
3	Sales	$1,120,000.00	$1,000,000.00
4	Cost of goods sold	971,250.00	875,000.00
5	Gross profit	$148,750.00	$125,000.00
6	Selling expenses	$71,250.00	$62,500.00
7	Administrative expenses	56,000.00	50,000.00
8	Total operating expenses	$127,250.00	$112,500.00
9	Income before income tax	$21,500.00	$12,500.00
10	Income tax expense	8,000.00	5,000.00
11	Net income	$13,500.00	$7,500.00