For 2010, Wiglaf Technology Company reported its most significant decline in net income in years. At the end of the year, C. S. Lewis, the president, is presented with the following condensed comparative income statement:

Instructions1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 2009 as the base year. Round to one decimal place.2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in(1).

Wiglaf Technology Company Comparative lIncome Statement For the Years Ended December 31, 2010 and 2009 2010 2009 Sales $560,000 37,500 $522,500 372,000 $150,500 $ 52,000 30,500 $ 82,500 $ 68,000 3,000 $ 71,000 5,500 $ 65,500 $500,000 25,000 $475,000 300,000 $175,000 $ 40,000 25.000 $ 65,000 $110,000 2,000 $112,000 5,000 $107,000 Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income Income before income tax Income tax expense Net income