Here are the comparative income statements of Blue Spruce Corp.. BLUE SPRUCE CORP. Comparative Income Statement For the Years Ended December 31 2020 2019 Net sales $540,000 $450,000 Cost of goods sold 441,180 381,600 Gross Profit 98,820 68,400 Operating expenses 67,500 40,500 Net income $ 31,320 $ 27,900 (a) Prepare a horizontal analysis of the income statement data for Blue Spruce Corp., using 2019 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%.) BLUE SPRUCE CORP. Comparative Income Statement choose the accounting period Increase or (Decrease) During 2020 2020 2019 Amount Percentage Net sales $540,000 $450,000 $enter a dollar amount enter percentages rounded to 1 decimal place % Cost of goods sold 441,180 381,600 enter a dollar amount enter percentages rounded to 1 decimal place % Gross Profit 98,820 68,400 enter a dollar amount enter percentages rounded to 1 decimal place % Operating expenses 67,500 40,500 enter a dollar amount enter percentages rounded to 1 decimal place % Net income $ 31,320 $ 27,900 $enter a total net income amount enter percentages rounded to 1 decimal place % (b) Prepare a vertical analysis of the income statement data for Blue Spruce Corp. for both years. (Round percentages to 1 decimal place, e.g. 12.1%.) BLUE SPRUCE CORP. Condensed Income Statements choose the accounting period 2020 2019 $ Percent $ Percent Net sales $540,000 enter percentages rounded to 1 decimal place % $450,000 enter percentages rounded to 1 decimal place % Cost of goods sold 441,180 enter percentages rounded to 1 decimal place % 381,600 enter percentages rounded to 1 decimal place % Gross Profit 98,820 enter percentages rounded to 1 decimal place % 68,400 enter percentages rounded to 1 decimal place % Operating expenses 67,500 enter percentages rounded to 1 decimal place % 40,500 enter percentages rounded to 1 decimal place % Net income $ 31,320 enter percentages rounded to 1 decimal place % $ 27,900 enter percentages rounded to 1 decimal place
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Here are the comparative income statements of Blue Spruce Corp..
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BLUE SPRUCE CORP.
Comparative Income Statement For the Years Ended December 31 |
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|---|---|---|---|---|
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2020
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2019
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Net sales
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$540,000
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$450,000
|
||
|
Cost of goods sold
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441,180
|
381,600
|
||
|
Gross Profit
|
98,820
|
68,400
|
||
|
Operating expenses
|
67,500
|
40,500
|
||
|
Net income
|
$ 31,320
|
$ 27,900
|
(a)
Prepare a horizontal analysis of the income statement data for Blue Spruce Corp., using 2019 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%.)
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BLUE SPRUCE CORP.
Comparative Income Statement choose the accounting period |
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|
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|---|---|---|---|---|---|---|---|---|
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Increase or (Decrease) During 2020
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||||||||
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2020
|
2019
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Amount
|
Percentage
|
|||||
|
Net sales
|
$540,000
|
$450,000
|
$enter a dollar amount
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Cost of goods sold
|
441,180
|
381,600
|
enter a dollar amount
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Gross Profit
|
98,820
|
68,400
|
enter a dollar amount
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Operating expenses
|
67,500
|
40,500
|
enter a dollar amount
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Net income
|
$ 31,320
|
$ 27,900
|
$enter a total net income amount
|
enter percentages rounded to 1 decimal place
|
%
|
(b)
Prepare a vertical analysis of the income statement data for Blue Spruce Corp. for both years. (Round percentages to 1 decimal place, e.g. 12.1%.)
|
BLUE SPRUCE CORP.
Condensed Income Statements choose the accounting period |
|---|
|
|
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|---|---|---|---|---|---|---|---|---|---|
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2020
|
2019
|
||||||||
|
$
|
Percent
|
$
|
Percent
|
||||||
|
Net sales
|
$540,000
|
enter percentages rounded to 1 decimal place
|
%
|
$450,000
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Cost of goods sold
|
441,180
|
enter percentages rounded to 1 decimal place
|
%
|
381,600
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Gross Profit
|
98,820
|
enter percentages rounded to 1 decimal place
|
%
|
68,400
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Operating expenses
|
67,500
|
enter percentages rounded to 1 decimal place
|
%
|
40,500
|
enter percentages rounded to 1 decimal place
|
%
|
|||
|
Net income
|
$ 31,320
|
enter percentages rounded to 1 decimal place
|
%
|
$ 27,900
|
enter percentages rounded to 1 decimal place
|
%
|
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