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13.

Horizontal Analysis of Income Statement

For 20Y2, 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 20Y1
	20Y2		20Y1
Sales	$677,216		$608,000
Cost of goods sold	471,200		380,000
Gross profit	$206,016		$228,000
Selling expenses	$66,300		$51,000
Administrative expenses	38,910		32,000
Total operating expenses	$105,210		$83,000
Income from operations	$100,806		$145,000
Other revenue	3,216		2,600
Income before income tax	$104,022		$147,600
Income tax expense	29,100		44,300
Net income	$74,922		$103,300

Required:

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place. Use the minus sign to indicate a decrease in the "Increase (Decrease)" columns.

McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1	Difference - Amount	Difference - Percent
Sales	$677,216	$608,000	$	%
Cost of goods sold	471,200	380,000		%
Gross profit	$206,016	$228,000	$	%
Selling expenses	$66,300	$51,000	$	%
Administrative expenses	38,910	32,000		%
Total operating expenses	$105,210	$83,000	$	%
Income from operations	$100,806	$145,000	$	%
Other revenue	3,216	2,600		%
Income before income tax	$104,022	$147,600	$	%
Income tax expense	29,100	44,300		%
Net income	$74,922	$103,300	$	%

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