# Income statement data for Wint

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

 1 Current Year Previous Year 2 Sales \$1,938,000.00 \$1,700,000.00 3 Cost of goods sold 1,608,200.00 1,462,000.00 4 Gross profit \$329,800.00 \$238,000.00 5 Selling expenses \$67,800.00 \$60,000.00 6 Administrative expenses 49,280.00 44,000.00 7 Total operating expenses \$117,080.00 \$104,000.00 8 Income before income tax \$212,720.00 \$134,000.00 9 Income tax expense 13,090.00 8,500.00 10 Net income \$199,630.00 \$125,500.00

 A. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. B. What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.

# Income statement data for Wint

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

 1 Current Year Previous Year 2 Sales \$2,280,000.00 \$2,000,000.00 3 Cost of goods sold 1,960,000.00 1,750,000.00 4 Gross profit \$320,000.00 \$250,000.00 5 Selling expenses \$156,500.00 \$125,000.00 6 Administrative expenses 122,000.00 100,000.00 7 Total operating expenses \$278,500.00 \$225,000.00 8 Income before income tax \$41,500.00 \$25,000.00 9 Income tax expense 16,600.00 10,000.00 10 Net income \$24,900.00 \$15,000.00

 A. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. B. What conclusions can be drawn from the horizontal analysis?
 Winthrop Company Comparative Income Statement For the Years Ended December 31
 1 Increase (Decrease) Increase (Decrease) 2 Current Year Previous Year Amount Percent 3 Sales \$2,280,000.00 \$2,000,000.00 4 Cost of goods sold 1,960,000.00 1,750,000.00 5 Gross profit \$320,000.00 \$250,000.00 6 Selling expenses \$156,500.00 \$125,000.00 7 Administrative expenses 122,000.00 100,000.00 8 Total operating expenses \$278,500.00 \$225,000.00 9 Income before income tax \$41,500.00 \$25,000.00 10 Income tax expense 16,600.00 10,000.00 11 Net income \$24,900.00 \$15,000.00

# Income statement data for Wint

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 \$418,200 \$340,000 Cost of goods sold 350,900 290,000 Gross profit \$67,300 \$50,000 Selling expenses \$19,210 \$17,000 Administrative expenses 16,940 14,000 Total operating expenses \$36,150 \$31,000 Income before income tax \$31,150 \$19,000 Income tax expenses 12,500 7,600 Net income \$18,650 \$11,400

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.

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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