Question - Income statement data for Grendel Images Company for the years ended December 31, 2010 and 2009, are as follows:

2010 2009

Sales $196,000 $160,000

Cost of goods sold 170,100 140,000

Gross profit $ 25,900 $ 20,000

Selling expenses $ 12,200 $ 10,000

Administrative expenses 9,750 8,000

Total operating expenses $ 21,950 $ 18,000

Income before income tax $ 3,950 $ 2,000

Income tax expense 2,000 1,000

Net income $ 1,950 $ 1,000

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 2010 when compared with 2009. Round to one decimal place.

b. What conclusions can be drawn from the horizontal analysis?