Module 4 Textbook Problem 1 Learning Objective: 4-1 Differentiate between horizontal and vertical analysis Income statements for Rundle Company for Year 3 and Year 4 follow: RUNDLE COMPANY Income Statements Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income Year 4 $200,700 Year 3 $180,700 142,500 120,500 21,800 19,800 13,000 15,000 3,000 5,000 $180,300 $160,300 20,400 6,900 20,400 3,100 $ 13,500 $ 17,300 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. Complete this question by entering your answers in the tabs below. Required A Required B Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 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. Complete this question by entering your answers in the tabs below. Required A Required B Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. (Negative answers should be indicated by a minus sign. Round your percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).) RUNDLE COMPANY Horizontal Analysis of Income Statements Percentage Change over Year 3 Sales 11.0 % Cost of goods sold 18.2 Selling expenses 10.1 Administrative expenses (13.3) Interest expense (40.0) Total expenses 12.5 Income before taxes 0.0 Income taxes expense Net income (loss) % Complete this question by entering your answers in the tabs below. Required A Required B Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. (Percentages may not add exactly due to rounding. Round your percentage answers to 1 decimal place. (i.e., 0.234 should be entered as 23.4).) Sales RUNDLE COMPANY Vertical Analysis of Income Statements Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income Percentage of Percentage of Sales Year 4 Sales Year 3 100.0% 100.0% % %