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.

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