Question

Income statement data for Winthrop Company for two recent years ended December 31, are as follows:

	Current Year			Previous Year
Sales	$838,200			$660,000
Cost of goods sold	706,800			570,000
Gross profit	$131,400			$90,000
Selling expenses	$38,610			$33,000
Administrative expenses	35,000			28,000
Total operating expenses	$73,610			$61,000
Income before income tax	$57,790			$29,000
Income tax expenses	23,100			11,600
Net income	$34,690			$17,400

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 year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$838,200	$660,000	$	%
Cost of goods sold	706,800	570,000		%
Gross profit	$131,400	$90,000	$	%
Selling expenses	$38,610	$33,000	$	%
Administrative expenses	35,000	28,000		%
Total operating expenses	$73,610	$61,000	$	%
Income before income tax	$57,790	$29,000	$	%
Income tax expense	23,100	11,600		%
Net income	$34,690	$17,400	$	%

Answer 1

Winthrop Company
Comparative Income Statement
For the Years Ended December 31
	Current	Previous	Increase	Increase
	year	year	(Decrease)	(Decrease)
	Amount	Amount	Amount	Percent
Sales	838200	660000	178200	27.0%
Cost of goods sold	706800	570000	136800	24.0%
Gross profit	131400	90000	41400	46.0%
Selling expenses	38610	33000	5610	17.0%
Administrative expenses	35000	28000	7000	25.0%
Total operating expenses	73610	61000	12610	20.7%
Income before income tax	57790	29000	28790	99.3%
Income tax expense	23100	11600	11500	99.1%
Net income	34690	17400	17290	99.4%
Formula used:
Increase (Decrease)Amount = Current year Amount - Previous year Amount
Increase (Decrease) Percent= Increase (Decrease)Amount / Previous year Amount