Question

Question 25 The balance sheet data below for Randolph lance sheet data below for Randolph Company for two recent years Assets Year 2 Current assets Plant assets Total assets $ 445 680 $1,125 Year 1 $280 520 $800 Liabilities & Stockholders' Equity Current liabilities Long-term debt Common stock Retained earnings Total liabilities and stockholders' $ 285 255 325 260 $1,125 $120 160 320 200 $800 equity (a)Using horizontal analysis, show the percentage change for each balance sheet item using Year 1 as a base year. (b)Using vertical analysis, prepare a comparative balance sheet. Round percentages to one decimal place. (a) Using horizontal analysis Assets Current assets Plant assets Total assets Year 2 $ 445 680 $1.125 Year 1 $280 520 $800 Increase Decrease) Amount Percent ( 166.00 58.9% $160.00 30.8%. 3 2570040.6% Liabilities & Stockholders' Equity Current liabilities Long-term debt Common stock Retained earnings Total liabilities and stockholders' equity $ 285 255 325 260 $1.125 $120 160 320 200 $800 3165 0 95.00 135.00 $ 60.00 325.00 132.57. 59.4% 1.6%. 30.0%. 40.67

Answer 1

Using horizontal analysis Assets Year 2 Increase ( Increase Year 1 Decrease) Decrease) amount Percent 280 165 58.9% 520 160 30.8% 800 325 40.6% 445 Current assets Plant assets Total assets 680 1125 165 120 160 95 Liabilities & Stockholders Equity Current Liabilities Long term debt Common Stock Retained Earnings Total Liabilities and Stock holder's Equity 320 137.5% 59.4% 1.6% 30.0% 40.6% 200 60 1125 800 325

Using vertical analysis Assets Year 2 Year 2 Percentage Year 1 Year 1 Percentage Current assets Plant assets Total assets 445 680 1125 39.6% 60.4% 100.0% 280 520 800 35.0% 65.0% 100.0% Liabilities & Stockholders Equity Current Liabilities Long term debt Common Stock Retained Earnings Total Liabilities and Stock holder's Equity 285 255 325 2601 1125 25.3% 22.7% 28.9% 23.1% 100.0%) 120 160 320 200 800 15.0% 20.0% 40.0% 25.0% 100.0%

Bluestem Company Comparitive Income Statement For the Years ended December 31, Year 2 and Year 1 Year 2 Year 1 Amount Percent Amount Percent Sales 800000 100.00% 700000 100.00% Cost of Goods Sold 350000 43.75% 320000 45.71% Gross Profit 4500001 56.25% 380000 54.29% Selling expenses 150000 18.75% 110000 15.71% Administrative expenses 37000 4.63% 20000 2.86% Total Operating expenses 1870001 23.38% 130000 18.57% Income before Income Tax 263000 32.88% 250000 35.71% Income Tax 40000 5.00% 32000 4.57% Net Income 223000 27.88% 218000 31.14% Note: Sales amount is the base amount to calculate percentages