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 $878,400 $720,000 Cost of goods sold 725,900 610,000 Gross profit $152,500 $110,000 Selling expenses $42,560 $38,000 Administrative expenses 38,400 32,000 Total operating expenses $80,960 $70,000 Income before income tax $71,540 $40,000 Income tax expenses 28,600 16,000 Net income $42,940 $24,000 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 CurrentyearAmount PreviousyearAmount Increase(Decrease)Amount Increase(Decrease)Percent Sales $878,400 $720,000 $ % Cost of goods sold 725,900 610,000 % Gross profit $152,500 $110,000 $ % Selling expenses $42,560 $38,000 $ % Administrative expenses 38,400 32,000 % Total operating expenses $80,960 $70,000 $ % Income before income tax $71,540 $40,000 $ % Income tax expense 28,600 16,000 % Net income $42,940 $24,000 $ %

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 2PB

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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	$878,400		$720,000
Cost of goods sold	725,900		610,000
Gross profit	$152,500		$110,000
Selling expenses	$42,560		$38,000
Administrative expenses	38,400		32,000
Total operating expenses	$80,960		$70,000
Income before income tax	$71,540		$40,000
Income tax expenses	28,600		16,000
Net income	$42,940		$24,000

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	$878,400	$720,000	$	%
Cost of goods sold	725,900	610,000		%
Gross profit	$152,500	$110,000	$	%
Selling expenses	$42,560	$38,000	$	%
Administrative expenses	38,400	32,000		%
Total operating expenses	$80,960	$70,000	$	%
Income before income tax	$71,540	$40,000	$	%
Income tax expense	28,600	16,000		%
Net income	$42,940	$24,000	$	%

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