(Horizontal and Vertical Analysis) Presented below are comparative balance sheets for the Eola Yevette Company.

Instructions

(a) Prepare a comparative balance sheet of Yevette Company showing the percent each item is of the total assets or total liabilities and stockholders’ equity.

(b) Prepare a comparative balance sheet of Yevette Company showing the dollar change and the percent change for each item.

(c) Of what value is the additional information provided in part (a)?

(d) Of what value is the additional information provided in part (b)?

EOLA YEVETTE COMPANY COMPARATIVE BALANCE SHEET DECEMBER 31, 2004 AND 2003 December 31 2004 2003 Assets Cash Accounts receivable (net) $ 180,000 220,000 $ 275,000 155,000 Short-term investments 270,000 150,000 Inventories 960,000 980,000 Prepaid expense 25,000 25,000 Fixed assets 2,685,000 1,950,000 Accumulated depreciation (1,000,000) (750,000) $3,340,000 $2,785,000