a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current 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

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Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
Current Year
Previous Year
Sales
$683,200
$560,000
Cost of goods sold
583,100
490,000
Gross profit
$100,100
$70,000
Selling expenses
$28,000
$25,000
Administrative expenses
25,200
21,000
Total operating expenses
$53,200
$46,000
Income before income tax
$46,900
$24,000
Income tax expenses
18,800
9,600
Net income
$28,100
$14,400
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current 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
$683,200 $560,000 s
Sales
Cost of goods sold
583,100
490,000
Gross profit
$100,100
$70,000 s
Selling expenses
$28,000
$25,000 s
Administrative expenses
25,200
21,000
Total operating expenses
$53,200
$46,000 s
Income before income tax
$46,900
$24,000 s
Income tax expense
18,800
9,600
Net income
$28,100
$14,400 s
Transcribed Image Text:Horizontal Analysis of the Income Statement Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $683,200 $560,000 Cost of goods sold 583,100 490,000 Gross profit $100,100 $70,000 Selling expenses $28,000 $25,000 Administrative expenses 25,200 21,000 Total operating expenses $53,200 $46,000 Income before income tax $46,900 $24,000 Income tax expenses 18,800 9,600 Net income $28,100 $14,400 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current 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 $683,200 $560,000 s Sales Cost of goods sold 583,100 490,000 Gross profit $100,100 $70,000 s Selling expenses $28,000 $25,000 s Administrative expenses 25,200 21,000 Total operating expenses $53,200 $46,000 s Income before income tax $46,900 $24,000 s Income tax expense 18,800 9,600 Net income $28,100 $14,400 s
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.
Transcribed Image Text: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.
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