Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 13, Problem 13.5P
1)
To determine
Complete the comparing across time analysis of CompanyP’s comparative financial statement.
2)
To determine
Determine the amount of
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Horizontal Analysis of the Income Statement
Income statement data for Boone Company for the years ended December 31, 20Y5 and 20Y4, are as follows:
Sales
Cost of goods sold
Gross profit
Selling expenses
Administrative expenses
Total operating expenses
Income before income tax
Income tax expenses
Net income
20Y5
$748,200
(622,300)
$125,900
$(36,890)
(33,020)
$(69,910)
$55,990
(22,400)
$33,590
20Y4
Boone Company
$580,000
(490,000)
$90,000
$(31,000)
(26,000)
$(57,000)
$33,000
(13,200)
$19,800
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. Round percentage
answers to one decimal place.
a. Prepare a common-sized income statement comparing the results of operations for Dawg Electronics Company with the industry average. If required, round percentages to
one decimal place.
Dawg Electronics Company
Common-Sized Income Statement
Dawg Electronics Dawg Electronics
Electronics Industry
Company Amount Company Percent
Average
Sales
$3,750,000
100.0 %
100.0%
Cost of goods sold
(2,062,500)
550.0 %
(61.0)%
Gross profit
$1,687,500
45.0 %
39.0%
Selling expenses
$(1,125,000)
0.3 %
(23.0)%
Administrative expenses
(262,500)
0.7 %
(10.0)%
Total operating expenses
$(1,387,500)
37.0 %
(33.0)%
Operating income
$300,000
8.0 %
6.0%
Other revenue and expense:
Other revenue
15,000
0.4 %
3.0%
Other expense
(3,750)
0.1 %
(1.0)%
Income before income tax
$311,250
8.3 %
8.0%
Income tax expense
(93,750)
25 %
(2.5)%
Net income
$217,500
5.8 %
5.5%
Refer to the following selected company information to determine the Year 1 and Year 2 common size percentages for operating expenses using Net sales as the base.
Year 1
Year 2
Net sales
$397,800
$489,400
Cost of goods sold
134,660
210,400
Operating expenses
73,910
76,690
Net earnings
27,490
38,740
Answer:
A. 15.3% for Year 1 and 27.3% for Year 2
B. 33.9% for Year 1 and 43% for Year 2
C. 18.6% for Year 1 and 15.7% for Year 2
D. 20.4% for Year 1 and 19.3% for Year 2
E. 100% for Year 1 and 123% for Year 2
Chapter 13 Solutions
Financial Accounting
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
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