Using these data from the comparative balance sheet of Rollaird Company, perform vertical analysis.
Using these data from the comparative balance sheet of Rollaird Company, perform vertical analysis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![### Vertical Analysis of Comparative Balance Sheet
**Exercise Brief 18-05:**
Using the data from the comparative balance sheet of Rollaird Company, perform vertical analysis.
#### Balance Sheet Data:
| **Item** | **December 31, 2020** | **December 31, 2019** |
|-------------------------|-----------------------|-----------------------|
| **Accounts receivable** | $485,560 | $426,140 |
| **Inventory** | $807,640 | $606,320 |
| **Total assets** | $2,440,000 | $2,860,000 |
*(Round percentages to 1 decimal place, e.g., 12.1%.)*
#### Vertical Analysis Table:
**December 31, 2020:**
| **Item** | **Amount** | **Percentage** |
|-------------------------|------------|----------------|
| Accounts receivable | $485,560 | |
| Inventory | $807,640 | |
| Total assets | $2,440,000 | |
**December 31, 2019:**
| **Item** | **Amount** | **Percentage** |
|-------------------------|------------|----------------|
| Accounts receivable | $426,140 | |
| Inventory | $606,320 | |
| Total assets | $2,860,000 | |
In performing vertical analysis, each item on the balance sheet is expressed as a percentage of total assets. To compute the percentages, we use the formula:
\[ \text{Percentage} = \left( \frac{\text{Amount of Item}}{\text{Total Assets}} \right) \times 100 \]
For December 31, 2020:
- **Accounts receivable:**
\[ \left( \frac{485,560}{2,440,000} \right) \times 100 \approx 19.9\% \]
- **Inventory:**
\[ \left( \frac{807,640}{2,440,000} \right) \times 100 \approx 33.1\% \]
For December 31, 2019:
- **Accounts receivable:**
\[ \left( \frac{426,140}{2,860,000} \right) \times](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff9e159a4-9637-434e-a29d-9a02e82e3af6%2Fe02e71e1-62ac-4d04-a6ef-c48eb3508964%2Ff4kbl8d.jpeg&w=3840&q=75)
Transcribed Image Text:### Vertical Analysis of Comparative Balance Sheet
**Exercise Brief 18-05:**
Using the data from the comparative balance sheet of Rollaird Company, perform vertical analysis.
#### Balance Sheet Data:
| **Item** | **December 31, 2020** | **December 31, 2019** |
|-------------------------|-----------------------|-----------------------|
| **Accounts receivable** | $485,560 | $426,140 |
| **Inventory** | $807,640 | $606,320 |
| **Total assets** | $2,440,000 | $2,860,000 |
*(Round percentages to 1 decimal place, e.g., 12.1%.)*
#### Vertical Analysis Table:
**December 31, 2020:**
| **Item** | **Amount** | **Percentage** |
|-------------------------|------------|----------------|
| Accounts receivable | $485,560 | |
| Inventory | $807,640 | |
| Total assets | $2,440,000 | |
**December 31, 2019:**
| **Item** | **Amount** | **Percentage** |
|-------------------------|------------|----------------|
| Accounts receivable | $426,140 | |
| Inventory | $606,320 | |
| Total assets | $2,860,000 | |
In performing vertical analysis, each item on the balance sheet is expressed as a percentage of total assets. To compute the percentages, we use the formula:
\[ \text{Percentage} = \left( \frac{\text{Amount of Item}}{\text{Total Assets}} \right) \times 100 \]
For December 31, 2020:
- **Accounts receivable:**
\[ \left( \frac{485,560}{2,440,000} \right) \times 100 \approx 19.9\% \]
- **Inventory:**
\[ \left( \frac{807,640}{2,440,000} \right) \times 100 \approx 33.1\% \]
For December 31, 2019:
- **Accounts receivable:**
\[ \left( \frac{426,140}{2,860,000} \right) \times
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