Income statement data for Cascade Images Inc. for the years ended December 31, 20Y5 and 20Y4, are as follows:

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. Round to one decimal place.

b. What conclusions can be drawn from the horizontal analysis?

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20Υ5 20Y4 $ 500,000 (320,000) $ 180,000 $ (35,000) Sales $ 400,000 Cost of goods sold Gross profit (250,000) $ 150,000 $ (30,000) Selling expenses Administrative expenses (25,000) (25,000) $ (60,000) $ 120,000 $ (55,000) $ 95,000 Total operating expenses Income before income tax Income tax expense (40,000) $ 55,000 (45,000) Net income $ 75,000