Question

Problem 23.1A Horizontal and vertical analysis of income statement and balance sheet. LO 23-1, 23-2

The EastTN Company sells computer parts through a retail store that it operates. The firm’s comparative income statement and balance sheet for the years 2016 and 2015 are shown below.

  

1-a.	Complete both a horizontal and a vertical analysis of comparative income statement for the years 2016 and 2015. (Round your percentage answers to 1 decimal place. i.e., 0.123 should be entered as 12.3.)

1-b.	Complete both a horizontal and a vertical analysis of comparative balance sheet for the years 2016 and 2015. (Round your percentage answers to 1 decimal place. i.e., 0.123 should be entered as 12.3. Negative amounts should be indicated by a minus sign.)

The EastTN Company Comparative Income Statement For Years Ended December 31, 2016 and 2015 Amounts Percent of net sales Increase or (Decrease) Account name 2016 2015 2016 2015 Amount Percent Revenue Sales Less Sales Returns and Allowances 1,020,000 20,000 813,600 13,600 1,000,000 800,000 Net Sales Cost of Goods Sold Merchandise Inventory, January 1 Net Purchases Total Merchandise Available for Sale Less Merchandise Inventory, December 31 0.0 0.0 0.01% 100,000 344,500 44,500376,000 102,000 342,500 657,500 97,600 278,400 100,000 276,000 524,000 Cost of Goods Sold Gross Profit on Sales Operating Expenses Seing Expenses Sales Salaries Expense Payroll Tax Expense-Selling Other Selling Expenses 97,000 10,000 36,000 43,000 123,200 88,000 9,600 25,600 Total Selling Expenses General and Administrative Expenses Officers Salaries Expense Payroll Tax Expense-Administrative Depreciation Expense Other General and Administrative Expenses 118,400 11,200 8,000 11,200 Total General and Administrative Expenses 196,000 148,800 339,000272,000 318,500252,000 75,600 176,400 156,000 16,000 8,000 16,000 Total Operating Expenses Net Income Before Income Taxes Income Tax Expense Net Income After Income Taxes 95,550 222,950 The EastTN Company Comparative Balance Sheet For Years Ended December 31, 2016 and 2015 Amounts Percent of total assets Increase or (Decrease) Amount Percent Account name 2016 2015 2016 2015 Assets Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Supplies 59,000 101,000 110,000 5,000 1,200 362,300276,200 124,300 110,400 115,500 9,600 2,500 Total Current Assets Property, Plant, and Equipment Land Building and Equipment Less Accumulated Depreciation Net Book Value-Building and Equipment 89,000 96,200 (35,200) (26,400) 69,800 158,800 512,300435,000 89,000 96,200 61,000 Total Property, Plant, and Equipment Total Assets 150,000 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable Sales Tax Payable Pavroll Taxes Pavable Income Taxes Pavable 42,400 2,400 2,500 2,400 49,700 71,000 6,000 2,100 8,000 87,100 Total Current Liabilities Long-Term Liabilities Mortgage Payable 54,400 54,400 104,100 59,000 59,000 146,100 Total Long-Tem Liabilities otal Liabilities Stockholders Equity Common Stock Paid-in Capital-Common Stock Retained Earnings 10,000 10,000 388,200 268,900 408,200 288,900 435,000 10,000 10,000 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 512,300

Answer 1

EastTN Company 1.a.Complete both a horizontal and a vertical analysis of comparative income statement for the years 2016 and 2015 Comparative Income Statement For the years ended 31.12.2016 and 31.12.2015 Amounts Percent of net sae 2016 Increase or (Decrease) Amount Account Name Revenue Sales Less:Sales Returns and Allowances Net Sales Cost of goods sold Merchandise Inventory Jan 1 Net Purchases Total Merchandise Available Less:Merchandise Inventory Dec.31 Cost of goods sold Gross Profit on sales Operating Expenses Selling Expenses Sales Salaries Expense Payroll Tax Expense - Selling Other Selling Expense Total Selling Expense General and Administrative Expense Office Salaries Expense Payroll Tax Expense - Administrative Depreciation Expense Other General and Administrative Expense Total General and Administrative Expense Total Operating Expense Net Income before income tax Income Tax Expense Net Income after income tax 2015 2016 2015 Percent 25.37% 0.79% 24.58% 1020000 813600 206400 20000 13600 1000000 800000 100.00% 100.00% 200000 6400 100000 97600 10.00% 12.20% 2400 344500 278400 34.45% 34.80% 66100 444500 376000 44.45% 47.00% 68500 102000 100000 10.20% 12.50% 2000 342500 276000 34.25% 34.50% 66500 657500 524000 б5.75% 65.50% 133500 0.29% 8.12% 8.42% 0.25% 8.17% 16.41% 97000 88000 9.70% 11.00% 9000 10000 9600 1.00% 1.20% 36000 25600 3.60% 3.20% 10400 143000 123200 14.30% 15.40% 19800 1.11% 0.05% 1.28% 2.43% 400 156000 118400 15.60% 14.80% 37600 4.62% 0.59% 0.00% 0.59% 5.80% 8.24% 8.17% 2.45% 5.72% 16000 11200 1.60% 1.40% 8000 16000 196000 8000 0.80% 1.00% 1.60% 19.60% 339000 272000 33.90% 34.00% 67000 318500 252000 31.85% 31.50% 66500 4800 0 4800 47200 11200 148800 1.40% 18.60% 95550 75600 9.56% 9.45% 19950 222950 176400 22.30% 22.05% 46550

1.b.Complete both a horizontal and a vertical analysis of comparative balance sheet for the years 2016 and 2015. Comparative Balance sheet For the years ended 31.12.2016 and 31.12.2015 Amounts 2016 Percent of Total Asset Increase or (Decrease) 2015 Amoun Account Name Assets Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Supplies Total Current Assets Property, Plant and Equipment Land Building and Equipment Less:Accum. Depreciation Net Book value-Building and Equip Total Property, Plant and Equipment Total Assets Liabilities & Stockholders Equity Current Liabilities Accounts Payable Sales Tax Payable Payroll Taxes Payable Income Taxes Payable Total Current Liabilities Long Term Liabilities Mortgage Payable Total Long Term Liabilities Stockholders Equity Common Stock Paid in Capital - Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 2015 2016 tPercent 124300 59000 24.26% 13.56% 65300 110.68% 110400 101000 21.55% 23.22% 115500 110000 22.55% 25.29% 5000 1.87% 1.15% 0.28% 5500 4600 1300 362300 276200 70.72% 63.49% 86100 9.31% 5.00% 92.00% 108.33% 31.17% 9600 2500 1200 0.49% 17.37% 18.78% 20.46% 22.11% 6.07% 16.05% 36.51% 100.00% 89000 96200 89000 96200 35200-26400-6.87% 69800 158800 0 0 8800 8800 0.00% 0.00% 33.33% 11.91% 29.28% 100.00% 12.61% 61000 150000 512300435000 -8800-5.54% 77300 17.77% 71000 6000 0.47% 1.38% -3600 2100 0.49% 0.48% 8000 0.47% 1.84% 8.28% 16.32% 42400 2400 -28600-40.28% 60.00% 19.05% 2400 5600 49700 87100 9.70% 20.02% 37400-42.94% 54400 59000 10.62% 13.56% -4600 54400 59000 10.62% 13.56% -4600 7.80% 7.80% 10000 10000 1.95% 2.30% 10000 10000 1.95% 2.30% 388200 268900 75.78% 61.82% 119300 44.37% 408200 288900 79.68% 66.41% 119300 41.29% 512300 0 0.00% 0 0.00% 435000 100.00% 100.00% 77300 17.77%