This is ONE question.

Options:

Answer 1: increased/decreased

Answer 2: increased/decreased

Answer 3: increased/decreased

Answer 4: increase/decrease

Horizontal Analysis of Income Statement For 2012, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement: McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 2041 20Y2 20Y1 Sales $693,316 $617,000 Cost of goods sold 491,400 390,000 Gross profit $ 201,916 $227,000 $52,000 Selling expenses $68,900 40,720 33,000 $85,000 Administrative expenses Total operating expenses Income from operations Other income Income before income tax $109,620 $92,296 3,245 $142,000 2,600 $95,541 26,800 $144,600 43,400 Income tax expense Net income $68,741 $101,200 Required: 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. Use the minus sign to indicate a decrease in the "Difference" columns. If required, round to one decimal place. McDade Company Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 2012 2011 Difference - Amount Difference - Percent Sales $693,316 $617,000 $ Cost of goods sold 491,400 390,000 Gross profit $201,916 $227,000 Selling expenses $68,900 $52,000 Administrative expenses 40,720 33,000 $109,620 $85,000 Total operating expenses Income from operations Other income $92,296 3,245 $142,000 $ 2,600 Income before income tax $95,541 $144,600 $ Income tax expense 26,800 43,400 Net income $68,741 $101,200 $ 2. Net income has ; however, the cost of goods sold has from 20Y1 to 2042. Sales have , causing the gross profit to