Income statements for Thompson Company for 2011 and 2012 follow.

Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2011 and 2012.
b. Perform a vertical analysis, showing each income statement component as a percent of sales for each year.

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2012 2011 Sales $180,000 $200,000 Cost of goods sold Selling expenses Administrative expenses Interest expense 142,000 20,000 12,000 3,000 $177,000 23,000 120,000 18,000 14,000 5,000 Total expenses 157,000 Income before taxes 23,000 Income taxes expense 5,000 $ 18,000 3,000 $20,000 Net income