Help Presented below is selected data from the financial statements of Horizons, Inc. for the current and prior year:12/31/20X212/31/20X1Current assets$330,000$220,000Total assets$2,300,000$1,950,000Current liabilities$195,000$180,000Total liabilities$1,190,000$1,180,000Total stockholders' equity$1,110,000$770,000Net sales$5,200,000$3,900,000Cost of Goods Sold$3,800,000$2,690,000Wages expense$953,000$869,000Supplies expense$60,000$50,000Depreciation expense$35,000$32,000Interest expense$12,000$9,000Net income$340,000$250,000A horizontal analysis of the balance sheet would show (select all that apply):O A. Current assets increased 50% from 20X1 to 20X2O B. Total assets increased 17.95% from 20X1 to 20X2.O C. Total stockholders' equity increased 44.16 % from 20X1 to 20X2.O D. Net income increased 36% from 20X1 to 20X2.O E. The debt ratio for 20X2 is 51.74%.

Answered: Presented below is selected data from…

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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Presented below is selected data from the financial statements of Horizons, Inc. for the current and prior year:
12/31/20X2
12/31/20X1
Current assets
$330,000
$220,000
Total assets
$2,300,000
$1,950,000
Current liabilities
$195,000
$180,000
Total liabilities
$1,190,000
$1,180,000
Total stockholders' equity
$1,110,000
$770,000
Net sales
$5,200,000
$3,900,000
Cost of Goods Sold
$3,800,000
$2,690,000
Wages expense
$953,000
$869,000
Supplies expense
$60,000
$50,000
Depreciation expense
$35,000
$32,000
Interest expense
$12,000
$9,000
Net income
$340,000
$250,000
A horizontal analysis of the balance sheet would show (select all that apply):
O A. Current assets increased 50% from 20X1 to 20X2
O B. Total assets increased 17.95% from 20X1 to 20X2.
O C. Total stockholders' equity increased 44.16 % from 20X1 to 20X2.
O D. Net income increased 36% from 20X1 to 20X2.
O E. The debt ratio for 20X2 is 51.74%.

Expert Solution

Explanation -

The Statement of Financial Position -

The statement of financial position is the position of the assets as on the balance sheet date.

If we have to evaluate the horizontal analysis of the financial position then we have to use the following formula -

Current Asset (Current Year - Base Year) / Base Year.

We will get change between the current year and base year also by dividing the base year we will get the % change from the base year in the current year.

The Statement of Comprehensive Income -

The statement of comprehensive income is the profit earned and loss incurred in the period end.

If we evaluate the financial analysis of the financial position then we have to use the following formula -

Sales (Current Year - Base Year) / Base Year.

We will get change between the current year and base year also by dividing the base year we will get the % change from the base year in the current year.

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