For 2008, Dusan Water Supplies Inc. initiated a sales promotion campaign that included the expenditure of an additional $21,000 for advertising. At the end of the year, Ivana Novatna, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).

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Dusan Water Supplies Inc. Comparative Income Statement For the Years Ended December 31, 2008 and 2007 2008 2007 $214,000 4,000 $210,000 121,800 88,200 50,400 16,800 $67,200 (12,500) 21,000 4,200 25,200 8,400 S 16,800 Sales returns and allowances ....._.... . +........ .. . 5,000 142,500 Administrative expenses .. . 20,000 Income from operations... Other in 6,250 (2,500)