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

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place.

b. What conclusions can be drawn from the horizontal analysis?

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