Financial statements for Thorn Company follow.

Required
Prepare a horizontal analysis of both the balance sheet and incomestatement.

Transcribed Image Text:

THORN COMPANY Balance Sheets As of December 31 2008 2007 Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items 16,000 20,000 54,000 135,000 25,000 250,000 27,000 270,000 29,000 $576,000 S 12,000 6,000 46,000 143,000 10,000 217,000 20,000 255,000 24,000 S516,000 Total current assets Investments Plant (net) Land Total assets Liabilities and Stockholders Equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable 17,000 113,800 21,000 151,800 6,000 100,000 15,000 121,000 Total current liabilities Noncurrent liabilities Bonds payable Other 100,000 27,000 132000127000 248,000 100,000 32,000 Total noncurrent liabilities Total liabilities 283,800 Stockholders' equity Preferred stock, par value $10, 4% cumulative, non- participating, 7,000 shares authorized and issued no dividends in arrears Common stock, S5 par value, 50,000 shares authorized; 70,000 70,000 10,000 shares issued Paid-in capital in excess of par value Preferred Paid-in capital in excess of par value Common Retained earnings Total stockholders' equity 50,000 10,000 30,000 132,200 292,200 $576,000 50,000 10,000 30,000 108,000 268,000 S516,000 Total liabilities and stockholders' equity THORN COMPANY Statements of Income and Retained Earnings For the Years Ended December 31 2008 2007 Revenues S230,000 8,000 238,000 $210,000 Sales (net) Other revenues 5,000 Total revenues 215,000 Expenses Cost of goods sold Selling, general, and administrative expenses Interest expense Income tax expense 120,000 55,000 8,000 23,000 103,000 50,000 7.200 22.000 Total expenses 06,000 182 200 32,800 83,000 2,800 5,000 S132 200 $108,000 Net earnings (net income) Retained earnings, January 1 32,000 108,000 2,800 5,000 Less: Preferred stock dividends Common stock dividends Retained earnings, December 31