For 2010, Othere Technology Company initiated a sales promotion campaign that included the expenditure of an additional $20,000 for advertising. At the end of the year, George Wallace, the president, is presented with the following condensed comparative income statement:

Instructions1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).

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Othere Technology Company Comparative Income Statement For the Years Ended December 31, 2010 and 2009 2010 2009 Sales Sales returns and allowances $714,000 $612,000 14,000 12,000 Net sales $700,000 322,000 $378,000 $600,000 312,000 Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income $288,000 $154,000 $120,000 70,000 $224,000 66,000 $186,000 $102,000 24,000 $154,000 28,000 Income before income tax $126,000 $182,000 Income tax 70,000 60,000 $ 66,000 Net income $112,000