# Horizontal analysis of the income statement Income statement data for Winthrop Company for two recent years ended December 31 are as follows: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. b. What conclusions can be drawn from the horizontal analysis?

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Chapter
Section

### Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 17, Problem 5E
Textbook Problem
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## Horizontal analysis of the income statementIncome statement data for Winthrop Company for two recent years ended December 31 are as follows: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. RoundÂ percentages to one decimal place. b. What conclusions can be drawn from the horizontal analysis?

1.

To determine

Prepare the horizontal analysis of the comparative income statement of Company W.

### Explanation of Solution

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 W in the table presented as below:

 Â Â Â Â Â Â Â Â Â Â  Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Company W Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Comparative Income Statement Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  For the Year Ended December 31 Particulars Current Year Previous Year Amount Increase(Decrease) Percentage Â  \$ % Sales 2,280,000 2,000,000 280,000 14...

2.

To determine

Provide conclusion from the horizontal analysis.

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