For 20Y2, Gerhardt Inc. reported a significant increase in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages 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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Gerhardt Inc. Comparative Income Statement For the Years Ended December 31, 2OY2 and 20Y1 20Y2 20Y1 Sales. Cost of merchandise sold. Gross profit... Selling expenses.. Administrative expenses.. Total operating expenses. Income from operations. . S80S,200 365,400 $439.800 S610,000 280.000 $330,000 5 92,000 68,000 $160.000 $170,000 $117,200 87400 5204,600 $235,200 43,700 $278,900 Other revenue.. Income before income tax expense. Income tax expense. Net income... 40,000 $210,000 69.700 $209,200 51,500 $158,500 ....