Prepare a horizontal analysis of the income statements.

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Answer 1

Question

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

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Selected comparative financial statements of Korbin Company follow. Sales KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 $ 512,008 $ 392,240 2019 $ 272,200 Cost of goods sold 308,229 245,542 174,208 Gross profit 203,779 146,698 97,992 Selling expenses 72,705 54,129 35,930 Administrative expenses 46,081 34,517 22,593 Total expenses 118,786 88,646 58,523 Income before taxes .84,993 58,052 39,469 Income tax expense 15,809 11,901 8,012 Net income $ 69,184 $ 46,151 $ 31,457 KORBIN COMPANY Comparative Balance Sheets Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings December 31 2021 2020 2019 $ 54,370 0 $ 36,390 600 $ 48,645 3,870 99,436 90,776 53,339 Total liabilities and equity $ 153,806 $ 127,766 $ 105,854 $ 22,456 $ 19,037 $ 18,524 68,000 68,000 50,000 8,500 8,500 5,556 54,850 32,229 31,774 $ 153,806 $ 127,766 $ 105,854

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Answer 2

Question

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

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Answer 3

Question

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

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Answer 4

Question

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

Expert Solution & Answer

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Answer 5

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

(b)

To determine

Interpret the results of the horizontal analysis.

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

Answer 6

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

Answer 7

Chapter 2, Problem 2MAD

(a)

To determine

Prepare a horizontal analysis of the income statements.

Answer 8

(b)

To determine

Interpret the results of the horizontal analysis.

Answer 9

(b)

To determine

Interpret the results of the horizontal analysis.

Answer 10

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

Answer 11

c.

To determine

Explain the reasons for the decrease in the revenues and operating income in Year 2.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Prepare a horizontal analysis of the income statements.

Solution Summary: The author analyzes the income statements of Incorporation CMG and explains the reasons for the decrease in revenues and operating income.

Prepare a horizontal analysis of the income statements.

Interpret the results of the horizontal analysis.

Explain the reasons for the decrease in the revenues and operating income in Year 2.

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Chapter 2 Solutions