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.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 2PA
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Horizontal Analysis of the Income Statement

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

      Current Year       Previous Year
Sales $2,240,000      $2,000,000   
Cost of goods sold (1,925,000)     (1,750,000)  
Gross profit $315,000      $250,000   
Selling expenses $(152,500)     $(125,000)  
Administrative expenses (118,000)     (100,000)  
Total operating expenses $(270,500)     $(225,000)  
Income before income tax expense $44,500      $25,000   
Income tax expense (17,800)     (10,000)  
Net income $26,700     $15,000   

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.

Winthrop Company
Comparative Income Statement
For the Years Ended December 31
  Current
year Amount
Previous
year Amount
Increase
(Decrease) Amount
Increase
(Decrease) Percent
Sales $2,240,000 $2,000,000 $ %
Cost of goods sold (1,925,000) (1,750,000)   %
Gross profit $315,000 $250,000 $ %
Selling expenses $(152,500) $(125,000)   %
Administrative expenses (118,000) (100,000)   %
Total operating expenses $(270,500) $(225,000) $ %
Income before income tax expense $44,500 $25,000 $ %
Income tax expense (17,800) (10,000)   %
Net income $26,700 $15,000 $ %
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