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Horizontal analysis of income statement
2012
For 2012, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following
condensed comparative income statement:
McDade Company
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 2041
2011
Sales
$ 16,800,000 $ 15,000,000
Cost of goods sold
(11,500,000) (10,000,000)
Gross profit
$5,300,000 $5,000,000
Selling expenses
$ (1,770,000) $ (1,500,000)
Administrative expenses
(1,220,000) (1,000,000)
Total operating expenses
$ (2,990,000) $ (2,500,000)
Operating income
$ 2,310,000 $ 2,500,000
Other revenue
256,950
225,000
Income before income tax expense
$ 2,566,950 $ 2,725,000
Income tax expense
(1,413,000) (1,500,000)
Net income
$1,153,950 $1,225,000
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. Round percentages to one
decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
McDade Company
What’s the difference

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