For 2012, McFadden Inc. reported its most significant increase in net income in years. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).

Transcribed Image Text:

McFadden Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2011 2012 2011 Sales $516,600 $410,000 12,200 10,000 504,400 $400,000 200,000 $264400 $200,000 69,600 60,000 40,000 100,000 100,000 10,000 162,600 $110,000 5,000 105,000 Net sales... Cost of goods sold. 240,000 44,800 $114,400 150,000 12,600 Total operating expenses Other inco Income before income tax ime ....-.... 9,000 153,600 Net income..