Use the financial statements for Rhythmic Dance Studio to complete one horizontal analysis based on income statement balances and another based on balance sheet balances. (Hint: Use amounts from two statements to create each horizontal analysis.)

Notes:

• All calculations throughout this exercise should be rounded to two decimal places.
• Within your answer enter all accounts in the same order given in the instructions for the most recent year.

Rhythmic Dance Studio Income Statement For the Year Ended December 31, 2026
Revenues:
Service Revenue		$194,000
Expenses:
Salaries Expense	$82,400
Rent Expense	32,275
Supplies Expense	8,370
Telephone Expense	7,000
Utilities Expense	6,200
Depreciation Expense	4,200
Postage Expense	2,700
Miscellaneous Expense	8,500
Total Expenses		151,645
Net Income		$42,355

Rhythmic Dance Studio Balance Sheet December 31, 2026
Assets:
Cash		$41,000
Accounts Receivable		8,250
Supplies		24,975
Furniture	$12,500
Accum. Dep. - Furniture	2,200	10,300
Equipment	26,500
Accum. Dep. - Equipment	14,750	11,750
Total Assets			$96,275
Liabilities:
Accounts Payable		52,500
Salaries Payable		4,150
Owner's Equity:
Lucia Manning, Capital		39,625
Total Liabilities & Owner's Equity			$96,275

Rhythmic Dance Studio Income Statement For the Year Ended December 31, 2027
Revenues:
Service Revenue		$261,500
Expenses:
Salaries Expense	$101,450
Rent Expense	32,275
Supplies Expense	13,500
Telephone Expense	9,150
Depreciation Expense	6,300
Utilities Expense	5,850
Postage Expense	4,000
Miscellaneous Expense	17,200
Total Expenses		189,725
Net Income		$71,775

Rhythmic Dance Studio Balance Sheet December 31, 2027
Assets:
Cash		$62,500
Accounts Receivable		11,200
Supplies		24,140
Furniture	$12,500
Accum. Dep. - Furniture	4,350	8,150
Equipment	38,000
Accum. Dep. - Equipment	18,900	19,100
Total Assets			$125,090
Liabilities:
Accounts Payable		50,300
Salaries Payable		5,650
Owner's Equity:
Lucia Manning, Capital		69,140
Total Liabilities & Owner's Equity			$125,090