Question

Pinnacle Plus declared and paid a cash dividend of $6,500 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:
 

Required:

1. Complete the two final columns shown beside each item in Pinnacle Plus's comparative financial statements.
2-a. Which account increased by the largest dollar amount?
2-b. Which account increased by the largest percentage?

Answer 1

X for 1 AB E F G H horizontal analysis increase (decrease) in current year (versus the previous year) amount percentage current year previous year $ 121,000 $ 54,200 $ 66,800 $ 35,500 $ 3,900 $ 27,400 $ 8,220 $ 19,180 $ 106,700 $ 49,100 $ 57,600 $ 32,600 $ 3,900 $ 21,100 $ 6,330 $ 14,770 $ 14,300 $ 5,100 $ 9,200 $ 2,900 $0 $ 6,300 $ 1,890 $ 4,410 13.4% 10.4% 16.0% 8.9% 0.0% 29.9% 29.9% 29.9% income statement sales revenue cost of goods sold gross profit operating expenses interest expense income before income tax expense income tax expense (30%) net income balance sheet cash accounts receivable, net inventory property and equipment, net total assets accounts payable income tax payable note payable (long term) total liabilities common stock (par $10) retained earnings total liabilities and stockholders' equity $ 76,570 $ 17,200 $ 24,900 $ 94,900 $ 213,570 $ 44,200 $ 1,290 $ 39,000 $ 84,490 $ 89,000 $ 40,080 $ 213,570 $ 39,900 $ 10,200 $ 37,800 $ 104,500 $ 192,400 $36,100 $ 900 $ 39,000 $ 76,000 $ 89,000 $ 27,400 $ 192,400 $ 36,670 $7,000 $ 12,900 $ 9,600 $ 21,170 $ 8,100 $ 390 $o $ 8,490 $0 $ 12,680 $ 21,170 91.9% 68.6% -34.1% -9.2% 11.0% 22.4% 43.3% 0.0% 11.2% 0.0% 46.3% 11.0% | $ account increased by the largest dollar amount account increased by the largest percentage Cash Cash increased by increased by 36,670 91.9%

for formulas and calculations, refer to the image below -

ДА В G H horizontal analysis increase (decrease) in current year (versus the current year previous year amount percentage income statement sales revenue 121000 106700 =D6-E6 =F6/E6 cost of goods sold 54200 49100 =D7-E7 |=F7/E7 gross profit 66800 57600 =D8-E8 =F8/E8 operating expenses 35500 32600 =D9-E9 =F9/E9 interest expense 3900 3900 =D10-E10 =F10/E10 income before income tax expense 27400 21100 =D11-E11 =F11/E11 income tax expense (30%) 8220 6330 =D12-E12 =F12/E12 net income 19180 14770 =D13-E13 =F13/E13 balance sheet cash 76570 39900 =D15-E15 =F15/E15 accounts receivable, net 17200 10200 =D16-E16 =F16/E16 inventory 24900 37800 =D17-E17 =F17/E17 property and equipment, net 94900 104500 =D18-E18 =F18/E18 total assets 213570 192400 =D19-E19 =F19/E19 accounts payable 44200 36100 =D20-E20 =F20/E20 income tax payable 1290 900 =D21-E21 =F21/E21 note payable (long term) 39000 39000 =D22-E22 =F22/E22 total liabilities 84490 76000 =D23-E23 =F23/E23 common stock (par $10) 89000 89000 I=D24-E24 =F24/E24 retained earnings 40080 27400 =D25-E25 =F25/E25 total liabilities and stockholders' equity 213570 192400 =D26-E26 =F26/E26 2A 2B account increased by the largest dollar amount account increased by the largest percentage Cash Cash increased by =F15 increased by =G15

Answer 2

1. Income Statement

	Current year	Previous year	Amount	Percentage
Sales revenue	121,000	106,700	14,300	13.4%
Cost of goods sold	54,200	49,100	5,100	10.4%
Gross Profit	66,800	57,600	9,200	15.9%
Operating expenses	35,500	32,600	2,900	8.9%
Interest expense	3,900	3,900	Nil	Nil
Income before income tax expense	27,400	21,100	6,300	29.8%
Income tax expense (30%)	8,220	6,330	1,890	29.8%
Net Income	19,180	14,770	4,410	29.8%

Balance Sheet

	Current year	Previous year	Amount	Percentage
Cash	76,570	39,900	36,670	91.9%
Accounts receivable	17,200	10,200	7,000	68.6%
Inventory	24,900	37,800	-12,900	-34.1%
Property and equipment	94,900	104,500	-9,600	-9.2%
Total assets	213,570	192,400	21,170	11%
Accounts payable	44,200	36,100	8,100	22.4%
Income tax payable	1,290	900	390	43.3%
Note payable	39,000	39,000	Nil	Nil
Total liabilities	84,490	76,000	8,490	11.2%
Common stock	89,000	89,000	Nil	Nil
Retained earnings	40,080	27,400	12,680	46.3%
Total liabilities and stockholders' equity	213,570	192,400	21,170	11%

Amount Increase / Decrease = Current year - Previous year

% Increase / Decrease = Amount Increase / Decrease / Previous year

2. Cash account is increased by lagrest dollar amount i.e $36,670.

3. Cash account is increased by lagrest percentage i.e 91.9%.