Income statements for Adams Company for Year $3$ and Year $4$ follow:

ADAMS COMPANY

Income Statements

Year $4$ Year $3$

Sales $ $200,900$ $ $180,900$

Cost of goods sold $143,800121,800$

Selling expenses $20,10018,100$

Administrative expenses $13,00015,000$

Interest expense $4,0006,000$

Total expenses $ $180,900$ $ $160,900$

Income before taxes $20,00020,000$

Income taxes expense $6,4003,100$

Net income $ $13,600$ $ $16,900$

Required

a$.$ Perform a horizontal analysis, showing the percentage change in each income statement component between Year $3$ and Year $4.$

b$.$ Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

Answer rating: 100% (QA)

To perform the horizontal analysis and vertical analysis for Adams Companys income statements I will follow these steps a Horizontal Analysis Horizont... View the full answer