Question

LA 14-5 Horizontal analysis of Income statement data for Winthrop com rizontal analysis of the income statement follows: Obj. 2 hrop Company for two recent years ended December 31 are as Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income before income tax expense Income tax expense Net income a. Prepare a comparative income staten (decrease) for the current year when com one decimal place. What conclusions can be drawn from the horizontal analysis? Sales Current Year Previous Year $2,240,000 $2,000,000 (1.925,000) (1,750,000) $ 315,000 $250,000 $ (152,500) $ (125,000) (118,000) (100,000) $ (270,500) $ (225,000) $ 44,500 $ 25,000 (17,800) (10,000) $ 26,700 $ 15,000 rative income statement with horizontal analysis, indicating the increase the current year when compared with the previous year. Round percentages to Ohi

Answer 1

Answer Page No 0 @ Comparative ale come stateraent with horizontal analysis *100 Amount increase (decrease) = Cercot year amount – Previous year am Percentage increase (decrease) = Amount increase (decrease] . Previous year amount Ceevrent Previous mount increased increase year 1 year . decrease) (decrease) sales $2240,000 $ 2000,000 $240,000 12% Cost of goods sold (4 1925000) 6 1 450.000) 115000) 100%; 26% 315000 $250,000 $65000 Gross profits Selling expense ($153500) (4135000) $ 24500) 18% Administrative expense ($118000) ($100,000) (* 18000) rotal operating (4040,500) (4225000)) ($ 45500) 2012% expense Income bebore income. €44500 $25000 $19500 78% tax expense 78% Income Jas expense $14800) (4.10,000) (# 4800) Net income $26700 $15000 $ 1900 48%

6 Conclusion :- The net income is increased Sales increases by 12%. Therefore improving: by 48 % , when the the company s