Prepare a horizontal analysis for the balance sheet below. Income Statement December 31, December 31, Increase Rate of 20x2 2001 Decrease Change Net Sales $ 900,000 $ 950,000 Cost of merchandise sold $ 620,000 $ 600,000 Gross profit 5 360,000 $ 150,000 Operating expenses Seling expenses $ 30,000 $ 37,000 Administrative expenses 5 55,000 5 45,000 Total operating expenses 5 85,000 $ $2,000 income from operation S 275,000 $ 268,000 Other even/expenses (6,000) s 14,000) Income before income tax 3 200,000 $ 264,000 Income tax expense 94,150 $ 92,400 Net income 3 174,850 $ 171,000 Balance Sheet December 31, December 31. Rate of 20x2 2001 Decrease Change . 2 Cash 9,000 $ . Accounts Receivable $ 20,000 $ 15,000 1,000 ventories 5 80,000 $ 100,000 5 tovestments 56,000 $ 95,000 1. Horizontal Analysis Vertical Analysis Financial Ratios Type here to search Balance Sheet December 31, December 31, Increase/ Rate of 20x2 20X1 Decrease Change Cash $ 9,000 $ Accounts Receivable 15,000 $ 20,000 $ 7,000 Inventories S 80,000 $ 100,000 Investments $ 56,000 $ 95,000 Land $ 200,000 $ 50,000 Equipment $ 120,000 $ 50,000 Accumulated depreciation-Equipment $ (60,000) S (40,000) $ 425,000 $ 277,000 Accounts payable $ 2,000 $ 16,000 Accrued expenses $ 8,000 $ 40,000 Dividends payable $ 11,000 $ 12,000 Common stock $ 100,000 $ 80,000 Paid-in capital in excess of par $ 120,000 $ 20,000 Retained earnings $ 184,000 $ 109,000 $ 425,000 $ 277,000 E G H D Prepare a vertical analysis for the balance sheet below. Income Statement December 31, December 31, 5 20X2 20X1 202X 20X1 6 Net Sales $ 980,000 $ 950,000 7 Cost of merchandise sold $ 620,000 $ 600,000 8 Gross profit $ 360,000 $ 350,000 9 Operating expenses: 10 Selling expenses $ 30,000 $ 37,000 11 Administrative expr S 55,000 $ 45,000 12 Total operating expenses $ 85,000 $ 13 Income from operations. 14 15 Other revenue/expenses Income before income tax 16 Income tax expense 17 Net income 555555 82,000 275,000 $ 268,000 (6,000) $ (4,000) 269,000 $ 264,000 94,150 $ 92,400 174,850 $ 171,600 18 19 Balance Sheet December 31, December 31, 20 20x2 20X1 202X 20x1 December 31, Balance Sheet December 31, 20X2 20X1 202X 20X1 Cash $ 9,000 $ 15,000 Accounts Receivable $ 20,000 $ 7,000 Inventories. $ 80,000 $ 100,000 Investments $ 56,000 $ 95,000 Land $ 200,000 $ 50,000 Equipment $ 120,000 $ 50,000 Accumulated depreciation--Eq S (60,000) $ (40,000) 3 $ 425,000 $ 277,000 9 Accounts payable $ 2,000 $ 16,000 11 Accrued expenses $ 8,000 $ 40,000 32 Dividends payable $ 11,000 $ 12,000 33 Common stock $ 100,000 $ 80,000 34 Paid-in capital in excess of par $ 120,000 $ 20,000 35 Retained earnings $ 184,000 $ 109,000 36 $ 425,000 $ 277,000 37 Income Statement December 31, December 31, Using the financial statements to the left, calculate the following ratios for 2002 a. Current ratio h. Ratio of liabilities to stockholders' equity 20x2 20x1 Net Sales $ 980,000 $ 950,000 Cost of merchandise sold S 620,000 $ 600,000 Gross profit $ 360,000 5 350,000 Operating expenses: Selling expenses $ 30,000 5 37,000 Administrative expenses $ 55,000 $ 45,000 Total operating expenses 5 85,000 $ 82,000 Income from operations $ 275,000 $ 268,000 Other revenon/expenses $ (6,000) $ Income before income tax $ 269,000 $ (4,000) 264,000 Income tax expense S 94,150 5 92,400 Net income $ 174,850 $ 171,600 Balance Sheet December 31, December 31, 20x2 2001 Cash $ 9,000 $ Accounts Receivable $ 20,000 5 15,000 7,000 Inventories S 80,000 $ 100,000 Total current assets $ 109,000 $ 122,000 investments S 56,000 $ 95,000 Land 200,000 $ 50,000 Horizontal Analysis Vertical Analysis I. Financial Ratios Accessby Gondo Asset turnover Balance Sheet December 31, 20x2 December 31, 20x1 Cash $ 9,000 $ 15,000 Accounts Receivable 20,000 $ 7,000 Inventories S 80,000 $ 100,000 Total current assets S 109,000 $ 122,000 Investments $ 56,000 $ 95,000 Land $ 200,000 $ 50,000 Equipment $ 120,000 $ 50,000 Accumulated depreciation--Equipment $ (60,000) S (40,000) Total assets S 425,000 $ 277,000 Accounts payable S 2,000 $ 16,000 Accrued expenses $ 8,000 $ 40,000 Dividends payable Total current liabilities Common stock Paid-in capital in excess of par Retained earnings Total liabilities and stockholders' equity S 11,000 $ 12,000 $ 21,000 $ 68,000 $ 100,000 $ 80,000 555 120,000 $ 20,000 184,000 $ 109,000 425,000 $ 277,000