Question - Income statement data for Web-Pics Company for the years ended December 31, 2008 and 2007, are as follows:
2008 2007
Sales $117,000 $150,000
Cost of goods 56,000 70,000
Sold
Gross profit $61,000 $80,000
selling expenses $36,000 $37,500
administrative expenses 12,500 10,000
Total operating $48,500 $47,500
expenses.
Income before
income tax. $12,500 $32,500
income tax expense 2,000 10,000
Net Income $10,000 $22,500
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 2008 when compared with 2007.
b. What conclusions can be drawn from the horizontal analysis?