For 2012, Eurie Company reported its most significant decline in net income in year. At the end of the year, H. Finn, 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 2011 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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Eurie Company Comparative income Statement For the Years Ended December 31, 2012 and 2011 2012 2011 $800,000 Sales 5928,000 Sales returns and allowances 70,000 50,000 Net sales.... 5858,000 5750,000 ........ ..... Cost of goods sold.. Gross profit . Selling expenses Administrative expenses Total operating expenses Income from operations 640,000 500,000 $218,000 $ 85,800 $250,000 S 65,000 43,400 35,000 $129,200 S 88,800 $100,000 $150,000 Other income... 16,000 5104,800 10,000 Income before income tax $160,000 9,200 $ 95,600 Income tax expense. 8,000 Net income 5152,000