Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 15.5EX
1.
To determine
Horizontal Analysis
Horizontal analysis refers to the measurement of percentage change in the comparative financial statements. It compares the items from the financial statements from one to the other years, and indicates the trends.
To Prepare: The horizontal analysis of the comparative income statement of Company M.
2.
To determine
To provide: Conclusion from the horizontal analysis.
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Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
Current Year
Previous Year
Sales
$965,200
$760,000
Cost of goods sold
818,400
660,000
Gross profit
$146,800
$100,000
Selling expenses
$43,290
$37,000
Administrative expenses
38,750
31,000
Total operating expenses
$82,040
$68,000
Income before income tax
$64,760
$32,000
Income tax expenses
25,900
12,800
Net income
$38,860
$19,200
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
Winthrop Company
Comparative Income Statement
For the Years Ended December 31
Current Previous
Increase
Increase
year
year
(Decrease) (Decrease)
Amount Amount
Amount
Percent
Sales
$965,200 $760,000
%
Cost of goods sold
818,400
660,000
%
Gross profit
$146,800 $100,000
%
Selling expenses
$43,290
$37,000
%
Administrative…
Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
Current Year
Previous Year
Sales
$897,900
$730,000
774,400
Cost of goods sold
640,000
Gross profit
$123,500
$90,000
Selling expenses
$35,030
$31,000
Administrative expenses
31,460
26,000
Total operating expenses
$66,490
$57,000
$57,010
Income before income tax
$33,000
22,800
Income tax expenses
13,200
$34,210
$19,800
Net income
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round
to one decimal place.
Winthrop Company
Comparative Income Statement
For the Years Ended December 31
Current Previous
Increase
(Decrease) (Decrease)
Percent
Increase
year
Amount
year
Amount
Amount
Horizontal Analysis of the Income Statement
Income statement data for Winthrop Company for two recent years ended December 31, are as follows:
Current Year
Previous Year
Sales
$878,400
$720,000
Cost of goods sold
725,900
610,000
Gross profit
$152,500
$110,000
Selling expenses
$42,560
$38,000
Administrative expenses
38,400
32,000
Total operating expenses
$80,960
$70,000
Income before income tax
$71,540
$40,000
Income tax expenses
28,600
16,000
Net income
$42,940
$24,000
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
Winthrop Company
Comparative Income Statement
For the Years Ended December 31
CurrentyearAmount
PreviousyearAmount
Increase(Decrease)Amount
Increase(Decrease)Percent
Sales
$878,400
$720,000
$
%
Cost of goods…
Chapter 15 Solutions
Financial & Managerial Accounting
Ch. 15 - Prob. 1DQCh. 15 - What is the advantage of using comparative...Ch. 15 - A companys current year net income (after income...Ch. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 15.1APECh. 15 - Prob. 15.1BPECh. 15 - Prob. 15.2APECh. 15 - Vertical analysis Income statement information for...Ch. 15 - Prob. 15.3APECh. 15 - Prob. 15.3BPECh. 15 - Accounts receivable analysis A company reports the...Ch. 15 - Accounts receivable analysis A company reports the...Ch. 15 - Prob. 15.5APECh. 15 - Inventory analysis A company reports the...Ch. 15 - Prob. 15.6APECh. 15 - Long-term solvency analysis The following...Ch. 15 - Prob. 15.7APECh. 15 - Times interest earned A company reports the...Ch. 15 - Prob. 15.8APECh. 15 - Prob. 15.8BPECh. 15 - Prob. 15.9APECh. 15 - Prob. 15.9BPECh. 15 - Prob. 15.10APECh. 15 - Common stockholders' profitability analysis A...Ch. 15 - Prob. 15.11APECh. 15 - Earnings per share and price-earnings ratio A...Ch. 15 - Prob. 15.1EXCh. 15 - Vertical analysis of income statement The...Ch. 15 - Common-sized income statement Revenue and expense...Ch. 15 - Vertical analysis of balance sheet Balance sheet...Ch. 15 - Prob. 15.5EXCh. 15 - Current position analysis The following data were...Ch. 15 - Prob. 15.7EXCh. 15 - Prob. 15.8EXCh. 15 - Prob. 15.9EXCh. 15 - Prob. 15.10EXCh. 15 - Inventory analysis The following data were...Ch. 15 - Inventory analysis Dell Inc. and Hewlett-Packard...Ch. 15 - Prob. 15.13EXCh. 15 - Prob. 15.14EXCh. 15 - Prob. 15.15EXCh. 15 - Prob. 15.16EXCh. 15 - Profitability ratios The following selected data...Ch. 15 - Profitability ratios Ralph Lauren Corporation...Ch. 15 - Six measures of solvency or profitability The...Ch. 15 - Five measures of solvency or profitability The...Ch. 15 - Prob. 15.21EXCh. 15 - Prob. 15.22EXCh. 15 - Prob. 15.23EXCh. 15 - Prob. 15.24EXCh. 15 - Prob. 15.25EXCh. 15 - Prob. 15.26EXCh. 15 - Horizontal analysis of income statement For 2016,...Ch. 15 - Prob. 15.2APRCh. 15 - Prob. 15.3APRCh. 15 - Nineteen measures of solvency and profitability...Ch. 15 - Solvency and profitability trend analysis Addai...Ch. 15 - Prob. 15.1BPRCh. 15 - Prob. 15.2BPRCh. 15 - Effect of transactions on current position...Ch. 15 - Nineteen measures of solvency and profitability...Ch. 15 - Prob. 15.5BPRCh. 15 - Financial Statement Analysis The financial...Ch. 15 - Prob. 15.1CPCh. 15 - Prob. 15.2CPCh. 15 - Prob. 15.3CPCh. 15 - Prob. 15.4CPCh. 15 - Prob. 15.5CP
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