Golden Corporation declared and paid $3,000 of cash dividends during the current year ended December 31. Its financial statements also reported the following summarized data:

Required:

1. Complete the two final columns shown beside each item in Golden Corporation’s comparative financial statements. Round the percentages to one decimal place.

2. Use the horizontal (trend) analyses to identify (a) a large percentage change in one account that is accompanied by a small dollar change and (b) a directional change in one account balance that is inconsistent with the direction of change in a related account balance.

Transcribed Image Text:

Increase (Decrease) in Current (versus Previous) Current Previous Amount Percentage Income Statement Sales revenue $180,000 $165,000 Cost of goods sold 110,000 100,000 Gross profit 70,000 65,000 Operating expenses 53,300 50,400 Interest expense 2,700 2,600 Income before income taxes 14,000 12,000 Income tax expense 4,000 3,000 Net income $ 10,000 $ 9,000 Balance Sheet Cash $ 4,000 $ 8,000 Accounts receivable (net) 19,000 23,000 Inventory 40,000 35,000 Property and equipment (net) 38,000 45,000 $108,000 $104,000 Current liabilities $ 16,000 $ 19,000 Note payable (long-term) Common stock (par $5) 45,000 45,000 30,000 30,000 Additional paid-in capital 5,000 5,000 Retained earnings 12,000 5,000 $108,000 $104,000