Question

I want to make sure I have the correct numbers for the horizontal line analysis, but I need help solving for percents under a vertical line analysis for the second question. Thanks

--/1 Question 3 View Policies Current Attempt in Progress Here are the comparative income statements of Pronghorn Corp. PRONGHORN CORP Comparative Income Statement For the Years Ended December 31 2019 2018 Net sales $540,000 $450,000 Cost of goods sold 434,700 377,550 Gross Profit 105,300 72,450 Operating expenses 66,420 39,150 Net income $ 38,880 $33,300 (a) Prepare a horizontal analysis of the income statement data for Pronghorn Corp, using 2018 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.1%.) PRONGHORN CORP Comparative Income Statement For the Years Ended December 31 Increase or (Decrease) During 2019 2019 2018 Amount Percentage Net sales $540,000 $450,000 $ 90,000 2.0 % Cost of goods sold 434,700 377,550 57,150 15.1 % Gross Profit 105,300 72,450 32,850 45.3 % Operating expenses 66,420 39,150 27,270 69.6 % Net income $38,880 $33,300 $ 5,580 100 % (b) Prepare a vertical analysis of the income statement data for Pronghorn Corp for both years. (Round percentages to 1 decimal place, e.g. 12.1%.) 2018 Percent PRONGHORN CORP Condensed Income Statements For the Years Ended December 31 2019 Percent % $450,000 % 377,550 % 72,450 % 39,150 % $33,300 Net sales $540,000 Cost of goods sold 434,700 Gross Profit 105,300 Operating expenses 66,420 Net income $ 38,880

Answer 1

(a) Prepare a horizontal analysis of the income statement data for Pronghorn Corp, using 2018 as a base. PRONGHORN CORP Comparative Income Statement For the Years Ended December 31 Increase or (Decrease) During 2019 2019 2018 Amount Percentage Net sales $540,000 $450,000 $90,000 20.0% Cost of goods sold 434,700 377,550 57,150 15.1 % Gross Profit 105,300 72,450 32,850 45.3% Operating expenses 66,420 39,150 27,270 69.7 % Net income $38,880 $33,300 $5,580 16.8 % Net sales Cost of goods sold Gross Profit Operating expenses Net income Explanation: Increase or (Decrease) During 2019 Amount Percentage ($540,000 - $450,000) = $90,000 [($90,000 / $450,000) * 100] = 20.0% ($434,700 - $377,550) = $57,150 [($57,150 / $377,550) * 100] = 15.1% ($105,300 – $72,450) = $32,850 [($32,850 / $72,450) * 100) = 45.3% |($66,420 - $39,150) = $27,270 [($27,270 / $39,150) * 100] = 69.7% ($38,880 - $33,300) = $5,580 [($5,580 / $33,300) * 100] = 16.8%

(b) Prepare a vertical analysis of the income statement data for Pronghorn Corp for both years. PRONGHORN CORP Condensed Income Statements For the Years Ended December 31 2019 2018 $ / Percent Net sales $540,000 100.0% $450,000 Cost of goods sold 434,700 80.5% 377,550 Gross Profit 105,300 19.5% 72,450 Operating expenses 66,420 12.3% 39,150 Net income $38,880 7.2 % $33,300 Percent 100.0 % 83.9% 16.1 % 8.7 % 7.4% 2018 Net sales Cost of goods sold Gross Profit Operating expenses Net income Explanation: 2019 Percent ($540,000 / $540,000) = 100.0% ($434,700 / $540,000) = 80.5% ($105,300 / $540,000) = 19.5% |($66,420 / $540,000) = 12.3% ($38,880 / $540,000) = 7.2% Percent ($450,000 / $450,000) = 100.0% ($377,550 / $450,000) = 83.9% ($72,450 / $450,000) = 16.1% ($39,150 / $450,000) = 8.7% ($33,300 / $450,000) = 7.4%