Refer to the information provided in E12–2.

Required:

Prepare a horizontal analysis for 2022 using 2021 as the base year.

E12–2

The income statements for Federer Sports Apparel for 2022 and 2021 are presented below.

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FEDERER SPORTS APPAREL Income Statements For the years ended December 31 2022 2021 Net sales $18,800,000 $15,500,000 Cost of goods sold Gross profit Operating expenses Depreciation expense 13,200,000 7,000,000 5,600,000 8,500,000 1,600,000 1,200,000 1,000,000 1,000,000 Inventory write-down 200,000 Loss (litigation) 300,000 6,000,000 1,500,000 Income before tax 1,300,000 Income tax expense 450,000 2,000,000 $ 4,000,000 Net income 2$ 850,000