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The following income statements were drawn from the annual report of The Western Sales Company. Year 2 Year 1 Sales 40,000 40,000 Cost of Goods

The following income statements were drawn from the annual report of The Western Sales Company.

Year 2 Year 1
Sales 40,000 40,000
Cost of Goods Sold (25,000 ) (25,000 )
Gross Margin 15,000 15,000
Operating Expenses (7,000 ) (9,000 )
Operating Income 8,000 6,000
Gain on the sale of land 0 5,000
Net Income 8,000 11,000

If the trends continue, investors can expect the company's net income for Year 3 to

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increase

decrease.

stay the same.

move up and down.

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