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).

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