For 2010, Othere Technology Company initiated a sales promotion campaign that

included the expenditure of an additional $20,000 for advertising. At the end of the

year, George Wallace, the president, is presented with the following condensed comparative

income statement:

Instruction1. 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).

Fill in the blank percents:

OTHERE TECHNOLOGY COMPANY
Comparative Income Statement
For the Years Ended December 31, 2010 and 2009
			2010				2009
			Amount		Percent		Amount		Percent
	Sales		$714,000		102.0%		$612,000		102.0%
	Sales returns and allowances		14,000		2.0%		12,000		2.0%
	Net sales		$700,000		100.0%		$600,000		100.0%
	Cost of goods sold		322,000		46.0%		312,000		52.0%
	Gross profit		$378,000		54.0%		$288,000		48.0%
	Selling expenses		$154,000				$120,000
	Administrative expenses		70,000				66,000
	Total operating expenses		$224,000				$186,000
	Income from operations		$154,000				$102,000
	Other income		28,000				24,000
	Income before income tax		$182,000				$126,000
	Income tax expense (benefit)		70,000				60,000
	Net income (loss)		$112,000				$66,000