Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
7th Edition
ISBN: 9781260581256
Author: John Wild
Publisher: McGraw-Hill Education
bartleby

Videos

Question
Book Icon
Chapter 13, Problem 1BTN
To determine

Trend percents:

A horizontal form of analysis which reveals a pattern in data across successive period is known as trend percents. In this analysis items are expressed as a percentage of a base year and items are taken line by line.

Common size percents:

Common size percent is the percent of each account expressed as a percentage of the sales value.

1.

To compute: Year 2013, 2014 and 2015 trend percents for net sales, cost of sales, operating income, other income(expense)net, provision for income taxes and net income of A Company by using 2013 as base year.

Expert Solution
Check Mark

Explanation of Solution

To compute trend percents, base amount is required firstly. Base amount is an amount which is predecided.

Formula to calculate trend percent is:

  TrendPercent(%)=Analysis Period AmountBase Period Amount×100

Trend percents are shown below:

    Particulars2015(%)2014(%)2013(%)
    Net sales136.75106.95100
    Cost of sales131.41105.30100
    Operating income145.37107.15100
    Other income (expense) net111.1684.78100
    Provision for income taxes145.76106.52100
    Net income144.16106.68100

Working Notes:

Trend percents for Sales:

  Trendpercent 2015=$233,715$170,910×100=136.75%

  Trendpercent 2014=$182,795$170,910×100=106.95%

  Trendpercent 2013=$170,910$170,910×100=100%

Trend percents for Cost of sales:

  Trendpercent 2015=$140,089$106,606×100=131.41%

  Trendpercent 2014=$112,258$106,606×100=105.30%

  Trendpercent 2013=$106,606$106,606×100=100%

Trend percents for operating income:

  Trendpercent 2015=$71,230$48,999×100=145.37%

  Trendpercent 2014=$52,503$48,999×100=107.15%

  Trendpercent 2013=$48,999$48,999×100=100%

Trend percents for other income (expense) net:

  Trendpercent 2015=$1,285$1,156×100=111.16%

  Trendpercent 2014=$980$1,156×100=84.78%

  Trendpercent 2013=$1,156$1,156×100=100%

Trend percents for provision for income tax:

  Trendpercent 2015=$19,121$13,118×100=145.76%

  Trendpercent 2014=$13,973$13,118×100=106.52%

  Trendpercent 2013=$13,118$13,118×100=100%

Trend percents for net income:

  Trendpercent 2015=$53,394$37,037×100=144.16%

  Trendpercent 2014=$39,510$37,037×100=106.68%

  Trendpercent 2013=$37,037$37,037×100=100%

Thus, Except other income (expenses). All other items show increased percents in every year.

2.

To determine

To compute: Common size percent of (a) total current assets (b) property, plant and equipment, net and (c) goodwill plus acquired tangible assets, net for A Company for the year 2014 and 2015.

2.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate common size percent is:

  Common Size Percent(%)=Analysis Year AmountBase Year Amount×100

Common size percents are shown below:

    Particulars2015(%)2014(%)
    (a) Total current assets30.7729.56
    (b) Property, plant and equipment, net7.748.9
    (c) Goodwill plus acquired intangible assets, net3.103.78

Working notes:

(a) Common size percents of total current assets:

  Commonsizepercent2015=$89,378$290,479×100=30.77%

  Commonsizepercent2014=$68,531$231,839×100=29.56%

(b) Common size percents of property, plant and equipment, net:

  Commonsizepercent2015=$22,471$290,479×100=7.74%

  Commonsizepercent2014=$20,624$231,839×100=8.9%

(c) Common size percents of goodwill plus acquired intangible assets, net:

  Commonsizepercent2015=$9009$290,479×100=3.10%

  Commonsizepercent2014=$8758$231,839×100=3.78%

3.

To determine

To explain: Changes across the year for the income statement trends computed in part 1 and the balance sheet percents computed in part 2.

3.

Expert Solution
Check Mark

Explanation of Solution

  • Trend percents of income statement items represent an increased trend. Such as net sales trend percent is 136.75 in the year 2015 and 106.95 in the 2014 same has been increases with 29.8 (136.75-106.95).
  • Only other income is reduced in 2014, all other income statement trends show increased numbers.
  • Common size percent of balance sheet items shows increase in the current assets of the company. For example total current assets of the company have been increased to 30.77% in 2015 year from 29.56% in 2014.
  • Other assets marginaly reduced in 2015 as a percentage of total assets.

Thus, A Company works quite efficiently.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Activity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.
Bodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.
Torre Corporation incurred the following transactions. 1. Purchased raw materials on account $46,300. 2. Raw Materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials. 3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages payable and $4,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor. 5. Overhead costs incurred on account were $80,500. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $88,000 were completed and transferred to finished goods. 8. Finished goods costing $75,000 to manufacture were sold on account for $103,000. Instructions Journalize the transactions.

Chapter 13 Solutions

Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card

Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Century 21 Accounting General Journal
Accounting
ISBN:9781337680059
Author:Gilbertson
Publisher:Cengage
Text book image
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Text book image
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Text book image
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License