horizontal analysis

Ch 17-3 Exercises and Problems Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 3. Current Year Previous Year Sales Cost of goods sold $750,200 613,600 $620,000 520,000 $100,000 $34,000 Gross profit Selling expenses Administrative expenses $136,600 $37,740 34,510 $72,250 $64,350 25,700 $38,650 29,000 $63,000 Total operating expenses Income before income tax 8 8 8 SINI EN IN Income tax expenses Net income a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $750,200 $620,000 $ % Ch 17-3 Exercises and Problems year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $750,200 $620,000 $ Cost of goods sold 613,600 520,000 Gross profit $136,600 $100,000 $ Selling expenses $37,740 $34,000 Administrative expenses 34,510 29,000 Total operating expenses $72,250 $63,000 $ Income before income tax $64,350 $37,000 $ Income tax expense 25,700 14,800 Net income $38,650 $22,200 $ b. The net income for Winthrop Company increased between years. This increase was the combined result of an in sales and percentage in cost of goods sold. The cost of goods sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales