
Connect 2-Semester Access Card for Fundamental Accounting Principles
22nd Edition
ISBN: 9780077632755
Author: John Wild
Publisher: McGraw-Hill Education
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Question
Chapter 17, Problem 1BPSB
Requirement-1:
To determine
To calculate: The trend analysis for income statements and
Requirement-1:
Expert Solution

Answer to Problem 1BPSB
Solution: The trend analysis for income statements and balance sheet is as follows:
TRIPOLY COMPANY | |||||||
Comparative Income Statements Trend analysis | |||||||
2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |
Sales | 65.1% | 70.9% | 73.3% | 79.1% | 86.0% | 89.5% | 100.0% |
Cost of Goods Sold | 72.6% | 76.3% | 77.4% | 82.6% | 89.5% | 92.1% | 100.0% |
Gross Profit | 59.2% | 66.7% | 70.0% | 76.3% | 83.3% | 87.5% | 100.0% |
Operating Expenses | 56.0% | 69.3% | 74.7% | 84.0% | 93.3% | 96.0% | 100.0% |
Net Income | 60.6% | 65.5% | 67.9% | 72.7% | 78.8% | 83.6% | 100.0% |
TRIPOLY COMPANY | |||||||
Comparative Balance Sheets Trend analysis | |||||||
2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |
Assets: | |||||||
Cash | 64.7% | 67.6% | 76.5% | 79.4% | 88.2% | 91.2% | 100.0% |
81.3% | 85.0% | 87.5% | 90.0% | 93.8% | 96.3% | 100.0% | |
Merchandise Inventory | 79.8% | 82.7% | 85.6% | 86.5% | 89.4% | 91.3% | 100.0% |
Other Current Assets | 85.0% | 85.0% | 90.0% | 95.0% | 95.0% | 100.0% | 100.0% |
Long Term Investments | 32.7% | 27.3% | 23.6% | 100.0% | 100.0% | 100.0% | 100.0% |
Plant assets, net | 112.3% | 113.2% | 114.5% | 90.7% | 92.5% | 94.3% | 100.0% |
Total Assets | 88.5% | 89.6% | 91.5% | 90.2% | 92.7% | 94.6% | 100.0% |
Liabilities and Equity: | |||||||
Current Liabilities | 52.9% | 55.7% | 66.4% | 67.9% | 75.0% | 92.9% | 100.0% |
Long term Liabilities | 35.4% | 46.2% | 54.6% | 56.9% | 74.6% | 82.3% | 100.0% |
Common Stock | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Other paid in capital | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
166.7% | 157.8% | 145.9% | 137.0% | 122.2% | 107.4% | 100.0% | |
Total Liabilities and Equity | 88.5% | 89.6% | 91.5% | 90.2% | 92.7% | 95.6% | 100.0% |
Explanation of Solution
The trend analysis for income statements and balance sheet is explained as follows:
TRIPOLY COMPANY | |||||||
Comparative Income Statements Trend analysis | |||||||
($ thousands) | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 |
Sales (A) | 560 | 610 | 630 | 680 | 740 | 770 | 860 |
Trend % = A / 860 | 65.1% | 70.9% | 73.3% | 79.1% | 86.0% | 89.5% | 100.0% |
Cost of Goods Sold (B) | 276 | 290 | 294 | 314 | 340 | 350 | 380 |
Trend % = B / 380 | 72.6% | 76.3% | 77.4% | 82.6% | 89.5% | 92.1% | 100.0% |
Gross Profit (C) | 284 | 320 | 336 | 366 | 400 | 420 | 480 |
Trend % = C / 480 | 59.2% | 66.7% | 70.0% | 76.3% | 83.3% | 87.5% | 100.0% |
Operating Expenses (D) | 84 | 104 | 112 | 126 | 140 | 144 | 150 |
Trend % = D / 150 | 56.0% | 69.3% | 74.7% | 84.0% | 93.3% | 96.0% | 100.0% |
Net Income (E) | 200 | 216 | 224 | 240 | 260 | 276 | 330 |
Trend % = E / 330 | 60.6% | 65.5% | 67.9% | 72.7% | 78.8% | 83.6% | 100.0% |
TRIPOLY COMPANY | |||||||
Comparative Balance Sheets Trend analysis | |||||||
($ thousands) | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 |
Assets: | |||||||
Cash (A) | 44 | 46 | 52 | 54 | 60 | 62 | 68 |
Trend % = A / 68 | 64.7% | 67.6% | 76.5% | 79.4% | 88.2% | 91.2% | 100.0% |
Accounts receivables, net (B) | 130 | 136 | 140 | 144 | 150 | 154 | 160 |
Trend % = B / 160 | 81.3% | 85.0% | 87.5% | 90.0% | 93.8% | 96.3% | 100.0% |
Merchandise Inventory (C) | 166 | 172 | 178 | 180 | 186 | 190 | 208 |
Trend % = C / 208 | 79.8% | 82.7% | 85.6% | 86.5% | 89.4% | 91.3% | 100.0% |
Other Current Assets (D) | 34 | 34 | 36 | 38 | 38 | 40 | 40 |
Trend % = D / 40 | 85.0% | 85.0% | 90.0% | 95.0% | 95.0% | 100.0% | 100.0% |
Long Term Investments (E) | 36 | 30 | 26 | 110 | 110 | 110 | 110 |
Trend % = E / 110 | 32.7% | 27.3% | 23.6% | 100.0% | 100.0% | 100.0% | 100.0% |
Plant assets, net (F) | 510 | 514 | 520 | 412 | 420 | 428 | 454 |
Trend % = F / 454 | 112.3% | 113.2% | 114.5% | 90.7% | 92.5% | 94.3% | 100.0% |
Total Assets (G) | 920 | 932 | 952 | 938 | 964 | 984 | 1040 |
Trend % = G / 1040 | 88.5% | 89.6% | 91.5% | 90.2% | 92.7% | 94.6% | 100.0% |
Liabilities and Equity: | |||||||
Current Liabilities (H) | 148 | 156 | 186 | 190 | 210 | 260 | 280 |
Trend % = H / 280 | 52.9% | 55.7% | 66.4% | 67.9% | 75.0% | 92.9% | 100.0% |
Long term Liabilities (I) | 92 | 120 | 142 | 148 | 194 | 214 | 260 |
Trend % = I / 260 | 35.4% | 46.2% | 54.6% | 56.9% | 74.6% | 82.3% | 100.0% |
Common Stock (J) | 160 | 160 | 160 | 160 | 160 | 160 | 160 |
Trend % = J / 160 | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Other paid in capital (K) | 70 | 70 | 70 | 70 | 70 | 70 | 70 |
Trend % = K / 70 | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Retained Earnings (L) | 450 | 426 | 394 | 370 | 330 | 290 | 270 |
Trend % = L / 270 | 166.7% | 157.8% | 145.9% | 137.0% | 122.2% | 107.4% | 100.0% |
Total Liabilities and Equity (M) | 920 | 932 | 952 | 938 | 964 | 994 | 1040 |
Trend % = M / 1040 | 88.5% | 89.6% | 91.5% | 90.2% | 92.7% | 95.6% | 100.0% |
Conclusion
Hence, Horizontal Analysis is used to analyses the trend of a particular item of a statement.
Requirement-2:
To determine
To analyze: The trends of the financial statements
Requirement-2:
Expert Solution

Answer to Problem 1BPSB
Solution: The Analysis of trends of the financial statements is as follows:
- Income Statement shows the Decreasing trend for sales revenues as well as for the net income.
- Balance sheet shows the Decreasing trend for total assets.
Explanation of Solution
The Analysis of trends of the financial statements is explained as follows:
- Income Statement shows the Decreasing trend for sales revenues as well as for the net income. The net income is continuously decreasing from the year 2009 to 2015.
- Balance sheet shows the Decreasing trend for total assets. The Total assets are continuously decreasing from the year 2009 to 2015.
Conclusion
Hence, Horizontal Analysis is used to analyses the trend of a particular item of a statement.
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Ch. 17 - Prob. 1DQCh. 17 - What is the difference between comparative...Ch. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - How does inventory turnover provide information...
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Identifying financial...Ch. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Prob. 6ECh. 17 - Prob. 7ECh. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Prob. 11ECh. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Prob. 1APSACh. 17 - Prob. 2APSACh. 17 - Prob. 3APSACh. 17 - Prob. 4APSACh. 17 - Prob. 5APSACh. 17 - Prob. 6APSACh. 17 - Prob. 1BPSBCh. 17 - Prob. 2BPSBCh. 17 - Prob. 3BPSBCh. 17 - Prob. 4BPSBCh. 17 - Prob. 5BPSBCh. 17 - Prob. 6BPSBCh. 17 - Prob. 17SPCh. 17 - Prob. 1BTNCh. 17 - Prob. 2BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 4BTNCh. 17 - Prob. 5BTNCh. 17 - Prob. 6BTNCh. 17 - Prob. 7BTNCh. 17 - Prob. 8BTNCh. 17 - Prob. 9BTN
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