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Ex. 187 The following items were taken from the financial statements

Question : Ex. 187 The following items were taken from the financial statements : 1312009

 
Ex. 187

The following items were taken from the financial statements of Rug, Inc., over a four-year period:

Item                2014         2013      2012      2011

Net Sales$900,000$650,000$600,000$500,000

Cost of Goods Sold  580,000  460,000  420,000  400,000

Gross Profit$320,000$190,000$180,000$100,000

 

Instructions

Using horizontal analysis and 2011 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit. Explain whether the trends are favorable or unfavorable for each item.

 

Ex. 188

The comparative balance sheet of Hale Company appears below:

HALE COMPANY

Comparative Balance Sheet

December 31,

———————————————————————————————————————————

Assets   2013  2012

Current assets .............................................$   360$300

Plant assets ...............................................     640  500

Total assets ...............................................$1,000$800

 

Liabilities and stockholders' equity

Current liabilities ...........................................$   150$120

Long-term debt ............................................240160

Common stock .............................................350280

Retained earnings ..........................................     260  240

Total liabilities and stockholders' equity ...........................$1,000$800

 

Instructions

(a)Using horizontal analysis, show the percentage change for each balance sheet item using 2012 as a base year.

(b)Using vertical analysis, prepare a common size comparative balance sheet.

 

Ex. 189

Using the following selected items from the comparative balance sheet of Ames Company, illustrate horizontal and vertical analysis.

December 31, 2013December 31, 2012

Accounts Receivable$   960,000$   600,000

Inventory975,000780,000

Total Assets4,000,0002,500,000

 

 

 

Solution
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