BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

Solutions

Chapter
Section
BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem
44 views

Horizontal analysis of income statement

For 20Y2, McDade Company reported a decline in net income. At the end of the year, T. Burrows, the president, is presented with the following condensed comparative income statement:

Chapter 17, Problem 1PA, Horizontal analysis of income statement For 20Y2, McDade Company reported a decline in net income.

Instructions

  1. 1. Prepare a comparative income statement with horizontal analysis for the two-year period, using 20Y1 as the base year. Round percentages to one decimal place.
  2. 2. To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).

1.

To determine

Prepare the horizontal analysis of the comparative income statement of Company M for the year 20Y2.

Explanation

Horizontal Analysis

Horizontal analysis refers to the measurement of percentage change in the comparative financial statements. It compares the items from the financial statements from one to the other years, and indicates the trends.

Prepare the horizontal analysis of the comparative income statement of Company M in the table presented as below:

                                                             Company M

                                                Comparative Income Statement

                                     For the Year Ended December 31, 20Y2 and 20Y1

Particulars20Y220Y1Amount
Increase(Decrease)Percentage
 $$$%
Sales16,800,00015,000,0001,800,00012...

2.

To determine

Comment on the significant relationships revealed by the horizontal analysis.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the two fundamental e-business models?

Foundations of Business (MindTap Course List)

How does a cost-efficient capital market help reduce the prices of goods and services?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Explain how a change in sales mix can change a companys break-even point.

Managerial Accounting: The Cornerstone of Business Decision-Making

BOND VALUATION An investor has two bonds in her portfolio. Bond C and Bond Z. Each bond matures in 4 years, has...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is a nondiscretionary bonus?

PAYROLL ACCT.,2019 ED.(LL)-TEXT

Give two examples of other receivables.

Survey of Accounting (Accounting I)