Question

Exercise 13-3 Computation and analysis of trend percents LO P1 Sales $443,487 $291,768 $235,297 $170,505 $126,300 Compute trend percents for the above accounts, using 2013 as the base year.

Exercise 13-3 Computation and analysis of trend percents LO P1 Sales Cost of goods sold Accounts receivable 2017 2016 2015 2014 2013 $ 443,487 $ 291,768 $ 235, 297 $ 170,505 $ 126, 300 233,163 153,319 125,704 90,413 65, 676 21,420 17,010 16,071 9,957 8,639 1:52:10 Compute trend percents for the above accounts, using 2013 as the base year. Book Trend Percent for Net Sales: 1 Choose Denominator: Hint Choose Numerator: Sales Print 2017: 2016: 2015: 2014: Trend Percent for Cost of Goods Sold: 1 Choose Denominator: Choose Numerator: 1 = Cost of goods sold Prey 1 of 6 Next >

Answer 1

Solution:

Computation of Trend Percent.

Trend Percent for Net Sales
	Choose Numerator:	/	Choose Denominator:	=
		/			Sales
2017	$                      443,487	/	$                          126,300		351	%
2016	$                      291,768	/	$                          126,300		231	%
2015	$                      235,297	/	$                          126,300		186	%
2014	$                      170,505	/	$                          126,300		135	%
Trend Percent for Cost of Goods Sold
	Choose Numerator:	/	Choose Denominator:	=
		/			Cost of goods sold
2017	$                      233,163	/	$                             65,676		355	%
2016	$                      153,319	/	$                             65,676		233	%
2015	$                      125,704	/	$                             65,676		191	%
2014	$                        90,413	/	$                             65,676		138	%
Trend Percent for Account Receivables
	Choose Numerator:	/	Choose Denominator:	=
		/			Accounts receivable
2017	$                        21,420	/	$                               8,639		248	%
2016	$                        17,010	/	$                               8,639		197	%
2015	$                        16,071	/	$                               8,639		186	%
2014	$                          9,957	/	$                               8,639		115	%

Analysis of Trend Percent.

1) Net sales has been increased sharply over the period of five years from $ 126,300 to $ 443,487.

2) Cost of goods sold also increased just as net sales with 2% to 5% differences every year, which means there is no decrease in cost of goods sold with increase in production. Ratio between Net sales and Cost of goods sold remains same.

3) Accounts receivables percentage is not as much as increase in net sales, which implies that there is growth in net sales and decrease in sales on account. Over a period of five years, there is in increase in percentage of cash sales rather than sales on account.