Domestic Income statements for Perez Company for Year 3 and Year 4 follow:PEREZ COMPANYIncome StatementsSalesCost of goods soldSelling expensesAdministrative expensesInterest expenseTotal expensesIncome before taxesIncome taxes expenseNet incomeYear 4$201,600144,00020,80012,2003,200$180, 20021,4005,400$ 16,000Year 3$181,600122,00018,80014,2005,200$160,20021,4003,400$ 18,000Requireda. 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.

Horizontal analysis is the one which is prepared by the entity for the purpose of analyzing the…

Income statements for Perez Company for Year 3 and Year 4 follow: PEREZ COMPANY Income Statements Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income Year 4 $201,600 144,000 20,800 12,200 3,200 $180, 200 Year 3 $181,600 122,000 18,800 14,200 5,200 $160,200 21,400 21,400 3,400 5,400 $ 16,000 $ 18,000 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.

Income statements for Perez Company for Year 3 and Year 4 follow: PEREZ COMPANY Income Statements Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income Year 4 $201,600 144,000 20,800 12,200 3,200 $180, 200 Year 3 $181,600 122,000 18,800 14,200 5,200 $160,200 21,400 21,400 3,400 5,400 $ 16,000 $ 18,000 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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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