Exercise 13-3A (Algo) Horizontal and vertical analysis LO 13-1 Income statements for Vernon Company for Year 3 and Year 4 follow: VERNON COMPANY Income Statements Year 4 Year 3 Sales $201,300 $181,300 Cost of goods sold 143,700 121,700 Selling expenses 21,000 19,000 Administrative expenses 12,200 14,200 Interest expense 3,700 5,700 Total expenses 180,600 160,600 Income before taxes 20,700 20,700 Income taxes expense Net income 5,400 3,900 $ 15,300 $ 16,800 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Exercise 13-3A (Algo) Horizontal and vertical analysis LO 13-1
Income statements for Vernon Company for Year 3 and Year 4 follow:
VERNON COMPANY
Income Statements
Year 4
Year 3
Sales
$201,300
$181,300
Cost of goods sold
143,700
121,700
Selling expenses
21,000
19,000
Administrative expenses
12,200
14,200
Interest expense
3,700
5,700
Total expenses
180,600
160,600
Income before taxes
20,700
20,700
Income taxes expense
Net income
5,400
3,900
$ 15,300
$ 16,800
Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.
b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Transcribed Image Text:Exercise 13-3A (Algo) Horizontal and vertical analysis LO 13-1 Income statements for Vernon Company for Year 3 and Year 4 follow: VERNON COMPANY Income Statements Year 4 Year 3 Sales $201,300 $181,300 Cost of goods sold 143,700 121,700 Selling expenses 21,000 19,000 Administrative expenses 12,200 14,200 Interest expense 3,700 5,700 Total expenses 180,600 160,600 Income before taxes 20,700 20,700 Income taxes expense Net income 5,400 3,900 $ 15,300 $ 16,800 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
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