For $20$Y$2,$ McDade Company reported a decline in net income. At the end of the year, T$.$ Burrows, the president, is presented with the following condensed comparative income statement:

McDade Company

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

$20$Y$220$Y$1$

Sales $$454,332$ $$389,000$

Cost of merchandise sold $335,000250,000$

Gross profit $$119,332$ $$139,000$

Selling expenses $$47,030$ $$33,000$

Administrative expenses $27,43021,000$

Total operating expenses $$74,460$ $$54,000$

Income from operations $$44,872$ $$85,000$

Other revenue $1,9331,600$

Income before income tax expense $$46,805$ $$86,600$

Income tax expense $13,10026,000$

Net income $$33,705$ $$60,600$

Required:

Question Content Area

$1.$ Prepare a comparative income statement with horizontal analysis for the two$-$year period, using $20$Y$1$ as the base year. Round percentages to one decimal place. Use the minus sign to indicate a decrease in the "Difference" columns.

McDade Company

Comparative Income Statement

For the Years Ended December $31,20$Y$2$ and $20$Y$1$

$20$Y$2$

$20$Y$1$ Difference

$-$ Amount Difference

$-$ Percent

Sales $$454,332$ $$389,000$ $fill in the blank ea$6875$f$55011$f$96\_1$

fill in the blank ea$6875$f$55011$f$96\_2$

$\%$

Cost of merchandise sold $335,000250,000$ fill in the blank ea$6875$f$55011$f$96\_3$

fill in the blank ea$6875$f$55011$f$96\_4$

$\%$

Gross profit $$119,332$ $$139,000$ $fill in the blank ea$6875$f$55011$f$96\_5$

fill in the blank ea$6875$f$55011$f$96\_6$

$\%$

Selling expenses $$47,030$ $$33,000$ $fill in the blank ea$6875$f$55011$f$96\_7$

fill in the blank ea$6875$f$55011$f$96\_8$

$\%$

Administrative expenses $27,43021,000$ fill in the blank ea$6875$f$55011$f$96\_9$

fill in the blank ea$6875$f$55011$f$96\_10$

$\%$

Total operating expenses $$74,460$ $$54,000$ $fill in the blank ea$6875$f$55011$f$96\_11$

fill in the blank ea$6875$f$55011$f$96\_12$

$\%$

Income from operations $$44,872$ $$85,000$ $fill in the blank ea$6875$f$55011$f$96\_13$

fill in the blank ea$6875$f$55011$f$96\_14$

$\%$

Other revenue $1,9331,600$ fill in the blank ea$6875$f$55011$f$96\_15$

fill in the blank ea$6875$f$55011$f$96\_16$

$\%$

Income before income tax expense $$46,805$ $$86,600$ $fill in the blank ea$6875$f$55011$f$96\_17$

fill in the blank ea$6875$f$55011$f$96\_18$

$\%$

Income tax expense $13,10026,000$ fill in the blank ea$6875$f$55011$f$96\_19$

fill in the blank ea$6875$f$55011$f$96\_20$

$\%$

Net income $$33,705$ $$60,600$ $fill in the blank ea$6875$f$55011$f$96\_21$

fill in the blank ea$6875$f$55011$f$96\_22$

$\%$

Question Content Area

$2.$ Net income has

from $20$Y$1$ to $20$Y$2.$ Sales have

; however, the cost of merchandise sold has

$,$ causing the gross profit to

$.$