For 20Y6, Fishing Experiences Inc. initiated a sales promotion campaign that included the expenditure of an additional $45,000 for advertising. At the end of the year, Colt Schultz, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement for the two-year period, presenting a vertical analysis of each item in relationship to sales for each of the years.
2. Comment on the significant relationships revealed by the vertical analysis prepared in (1).

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FISHING EXPERIENCES INC. Comparative Income Statement For the Years Ended December 31, 20Y6 and 20YS 20Y6 20Y5 Sales Cost of goods sold Gross profi Selling expenses Administrative expenses Total operating expenses Operating income Other revenue Income before income tax Income tax expense Net income 1,200,000 $1,000,000 (558,000) $ 442,000) (75,000) $ 576,000 (120,000) 5 (170,000) $ 406,000 30,000 436,000 (100,000) 336,000 $ (125,000) $317,000 30,000 $ 347,000 $ 257,000