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HORIZONTAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Amounts from the comparative income statement and balance sheet of Johnson Stores, Inc. For the last two years are as follows: REQUIRED Prepare a horizontal analysis of the statements. Add columns to show the amount of increase (decrease) and the percentage change. Round percentages to one decimal place. VERTI CAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Refer to the financial statements in Problem 24-8B. REQUIRED Prepare a vertical analysis of the income statement and balance sheet. Show each item on the income statement as a percentage of the net sales for each year. On the balance sheet, show each asset item as a percentage of the total assets and each liability and equity item as a percentage of the total liabilities and stockholders’ equity. Round percentages to one decimal place.

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College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160
Chapter 24, Problem 9SPB
Textbook Problem
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HORIZONTAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Amounts from the comparative income statement and balance sheet of Johnson Stores, Inc. For the last two years are as follows:

Chapter 24, Problem 9SPB, HORIZONTAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Amounts from the comparative income , example  1

Chapter 24, Problem 9SPB, HORIZONTAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Amounts from the comparative income , example  2

REQUIRED

Prepare a horizontal analysis of the statements. Add columns to show the amount of increase (decrease) and the percentage change. Round percentages to one decimal place.

VERTI CAL ANALY SIS OF COMPARATIVE FINANCIAL STATEMENTS Refer to the financial statements in Problem 24-8B.

REQUIRED

Prepare a vertical analysis of the income statement and balance sheet. Show each item on the income statement as a percentage of the net sales for each year. On the balance sheet, show each asset item as a percentage of the total assets and each liability and equity item as a percentage of the total liabilities and stockholders’ equity. Round percentages to one decimal place.

To determine

Prepare vertical analysis for income statement and balance sheet.

Explanation of Solution

Vertical analysis: The comparison of an item of a financial statement against the total amount of the same financial statement, to determine the relation between the two items, is referred to as vertical analysis. This analysis is also known as common-size analysis. The vertical analysis percentage is calculated by using the formula:

Verticalanalysispercentage=FinancialstatementitemBaseamount×100

Prepare vertical analysis for income statement as shown below:

Incorporation JS
Comparative Income Statement
For Years Ended December 31, 20-2 and 20-1
Particulars20-220-1
AmountPercentAmountPercent
Net sales (all on account)$467,865 100$305,145 100
Cost of goods sold256,95554.9149,00548.8
Gross profit$210,910 45.1$156,140 51.2
Administrative expenses$43,876 9.4$30,617 10
Selling expenses44,9949.631,29310.3
Total operating expenses$88,870 19$61,910 20.3
Operating income$122,040 26.1$94,230 30.9
Interest expense9160.29030.3
Income before income taxes$121,124 25.9$93,327 30.6
Income tax expense30,2806.519,9806.5
Net income$90,844 19.4$73,347 24

Table (1)

Prepare vertical analysis for balance sheet statement as show below:

Johnson Stores, Inc.
Comparative Balance Sheet
December 31, 20-2 and 20-1
Particulars20-220-1
AmountPercentAmountPercent
Assets    
Current assets:    
Cash$30,275 14

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Chapter 24 Solutions

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
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