For 20Y3, Greyhound Technology Company reported its most significant decline in net income in years. At the end of the year, Duane Vogel, the president, is presented with the following condensed comparative income statement:

		20Y3		20Y2		Increase (Decrease)
		Amount		Amount		Amount		Percent
Sales		$880,000		$800,000		$80,000		10.0%
Sales returns and allowances		18,000		15,000		3,000		20.0%
Net sales		$862,000		$785,000		$77,000		9.8%
Cost of goods sold		650,000		500,000		150,000		30.0%
Gross profit		$212,000		$285,000
Selling expenses		$44,000		$40,000
Administrative expenses		27,000		25,000
Total operating expenses		$71,000		$65,000
Income from operations		$141,000		$220,000
Other income		2,300		2,000
Income before income tax		$143,300		$222,000
Income tax expense		13,000		20,000
Net income		$130,300		$202,000

1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y2 as the base year. Round to one decimal place. 2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).