Bellingham Industries, a manufacturer of the furniture industry, had the following               financial performance for the last two years as shown on their income statements below:                               Billingham Industries, Inc.     Comparative Income Statement     For the Years Ended December 31, 2021 and 2020           2021   2020           Amount   Amount       Sales   $1,280,000   $1,180,000       Cost of goods sold   644,800   613,600       Gross profit   635,200   566,400       Selling expenses   230,500   188,800       Administrative expenses   182,500   177,000       Total operating expenses   413,000   365,800       Income from operations   222,200   200,600       Other income   77,000   70,800       Income before income tax   299,200   271,400       Income tax expense   121,600   106,200       Net income   $177,600   $165,200                                     1. Prepare a horizontal analysis using the form provided to the right.               2. What line item jumps off the page as the most negative change year to year               considering the sales growth?               3. What line item jumps off the page as the most positive change year to year               considering the sales growth?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Bellingham Industries, a manufacturer of the furniture industry, had the following              
financial performance for the last two years as shown on their income statements below:              
               
Billingham Industries, Inc.    
Comparative Income Statement    
For the Years Ended December 31, 2021 and 2020    
      2021   2020    
      Amount   Amount    
  Sales   $1,280,000   $1,180,000    
  Cost of goods sold   644,800   613,600    
  Gross profit   635,200   566,400    
  Selling expenses   230,500   188,800    
  Administrative expenses   182,500   177,000    
  Total operating expenses   413,000   365,800    
  Income from operations   222,200   200,600    
  Other income   77,000   70,800    
  Income before income tax   299,200   271,400    
  Income tax expense   121,600   106,200    
  Net income   $177,600   $165,200    
               
               
1. Prepare a horizontal analysis using the form provided to the right.              
2. What line item jumps off the page as the most negative change year to year              
considering the sales growth?              
3. What line item jumps off the page as the most positive change year to year              
considering the sales growth?              
               

 

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Step 1

Horizontal Analysis of income statement :— It is a type of income statement in which items of income statement are compared year to year. 

In this statement increase or decrease of all items of income statement is computed which is used to calculate % change of items of income statement from year to year. 

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