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Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $381,000 $343,000 Cost of merchandise sold 224,790 185,220 60,960 61,740 Selling expenses Administrative expenses Income tax expense 68,580 11,430 58,310 13,720 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $381,000 % $343,000 % Cost of merchandise sold 224,790 185,220 % % % % Selling expenses 60,960 % 61,740 % Administrative expenses 68,580 % 58,310 % % % % % Income tax expense 11,430 % 13,720 % % % b. The vertical analysis indicates that the cost of merchandise sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 3 percentage points