The income statements for Galaxy Tennis for the years ending December 31, 2021 and 2020, are provided below.

Required:

1. Complete the “Amount” and “%” columns to be used in a horizontal analysis of Galaxy Tennis income statement.

2. Discuss the major fluctuations in income statement items during the year.

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GALAXY TENNIS Income Statements For the years ended December 31 Increase (Decrease) 2021 2020 Amount % $6,150,000 2,850,000 $6,250,000 2,920,000 Net sales Cost of goods sold Gross profit Operating expenses 3,300,000 3,330,000 1,510,000 1,390,000 Operating income 1,790,000 1,940,000 Other income (expense) 60,000 85,000 Income before tax 1,850,000 2,025,000 Income tax expense 390,000 $1,460,000 435,000 Net income $1,590,000