Income statement data for Winthrop Company for two recent years ended December 31 are as follows:       Current Year       Previous Year Sales $2,240,000      $2,000,000    Cost of goods sold (1,925,000)     (1,750,000)   Gross profit $315,000      $250,000    Selling expenses $(152,500)     $(125,000)   Administrative expenses (118,000)     (100,000)   Total operating expenses $(270,500)     $(225,000)   Income before income tax expense $44,500      $25,000    Income tax expense (17,800)     (10,000)   Net income $26,700     $15,000    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 $2,240,000 $2,000,000 $fill in the blank 046aeef91077033_1 fill in the blank 046aeef91077033_2% Cost of goods sold (1,925,000) (1,750,000) fill in the blank 046aeef91077033_3 fill in the blank 046aeef91077033_4% Gross profit $315,000 $250,000 $fill in the blank 046aeef91077033_5 fill in the blank 046aeef91077033_6% Selling expenses $(152,500) $(125,000) fill in the blank 046aeef91077033_7 fill in the blank 046aeef91077033_8% Administrative expenses (118,000) (100,000) fill in the blank 046aeef91077033_9 fill in the blank 046aeef91077033_10% Total operating expenses $(270,500) $(225,000) $fill in the blank 046aeef91077033_11 fill in the blank 046aeef91077033_12% Income before income tax expense $44,500 $25,000 $fill in the blank 046aeef91077033_13 fill in the blank 046aeef91077033_14% Income tax expense (17,800) (10,000) fill in the blank 046aeef91077033_15 fill in the blank 046aeef91077033_16% Net income $26,700 $15,000 $fill in the blank 046aeef91077033_17 fill in the blank 046aeef91077033_18 b.  The net income for Winthrop Company increased between years. This increase was the combined result of an increase  in sales and a lower  percentage increase  in cost of goods sold. The cost of goods sold increased at a slower  rate than the increase in sales, thus causing the percentage increase in gross profit to be greater  than the percentage increase in sales.

Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill's data are expressed in dollars. The electronics industry averages are expressed in percentages. Electronics Tannenhill Industry Company Average Sales $2,320,000 100 % Cost of merchandise sold 1,624,000 73 Gross profit $696,000 27 % Selling expenses $394,400 15 % Administrative expenses 162,400 Total operating expenses $556,800 21 % Income from operations $139,200 6 % Other revenue and expense: Other revenue 46,400 2 Other expense (23,200) Income before income tax expense $162,400 7 % Income tax expense 69,600 Net income $92,800 3 %

Horizontal Analysis of the Income Statement Income statement data for Boone Company for the years ended December 31, 20Y5 and 20Y4, are as follows: 20Υ5 20Υ4 Sales $673,200 $510,000 Cost of goods sold (572,000) (440,000) Gross profit $101,200 $70,000 Selling expenses $(30,500) $(25,000) Administrative expenses (27,300) (21,000) Total operating expenses $(57,800) $(46,000) Income before income tax $43,400 $24,000 Income tax expenses (17,400) (9,600) Net income $26,000 $14,400 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. Round percentage answers to one decimal place. Boone Company Comparative Income Statement For the Years Ended December 31, 20Y5 and 20Y4 20Y5 Amount 20Y4 Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $673,200 $510,000 % Cost of goods sold (572,000) (440,000) Gross profit $101,200 $70,000 % Selling expenses $(30,500) $(25,000) Administrative expenses (27,300)…

Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $490,000 $446,000 Cost of merchandise sold 289,100 231,920 Selling expenses 78,400 84,740 Administrative expenses 88,200 75,820 Income tax expense 14,700 22,300 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $490,000 % $446,000 % Cost of merchandise sold 289,100 % 231,920 % % % Selling expenses 78,400 84,740 % Administrative expenses 88,200 % 75,820 % % % Income tax expense 14,700 % 22,300 % % % b. The vertical analysis indicates that the cost of merchandise sold as a percent of sales - by 7 percentage points, while selling expenses by 3…