1. (pic 2) prepare common size income statements for horizontal analysis. enter percentages in 2 decimal places

2. (pic 3) explain why net income decreases in 2010 and increased in 2011

Exercise 12-61 Horizontal Analysis of Income Statements Consolidated income statements for Karofsky Computer follow. Karofsky Computer Inc. Consolidated Income Statements (In thousands except per share amounts) Three fiscal years ended December 31 2011 2010 2009 Sales $9,188,748 $7,976,954 $7,086,542 Costs and expenses: Cost of goods sold $6,844,915 $5,248,834 $3,991,337 Research and development 564,303 664,564 602.135 Selling, general, and administrative 1,384,111 1,632,362 1,687,262 Restructuring costs and other (126,855) 320,856 $8,666,474 $7,866,616 $6,280,734 Operating income $ 522,274 $ 110,338 $ 805,808 Interest and other income, net (21,988) 29,321 49,634 Income before income taxes $ 139,659 $ 855,442 Provision for income taxes 190, 108 53,070 325,069 Net income $ 310,178 $ 86,589 $ 530,373 Earnings per common and common 2.61 equivalent share $ 0.73 4.33 Common and common equivalent shares used in the calculations of earnings per share 118,735 119,125 122,490 0 Consolidated Income Statements 2011 2010 2009 Sales 129.66 % 112.56 100 Costs and expenses: Cost of goods sold 171.49 131.51 100 Research and development - 93.72 110.37 200 Selling, general, and administ 82.03 96.75 100 Restructuring costs and other 137.99 125.25 100 % Operating income 64.81 13.69 % 100% Interest and other income, ne -44.30 59.07 100 Income before income taxes 100 % 100 100 % Provision for income taxes 100 % 100 100 Net income 58.48 16.33 100 Restructuring costs and other 100 1000 100 % 2. Explain why net income decreased in 2010 and increased in 2011. The input in the box below will not be graded, but may be reviewed and considered by your instructor. blank