80.2K

Verified Solution

Link Copied!

Prepare a horizontal analysis of both the balance sheet and income statement for Year 4 and Year 3.

a. Prepare a horizontal analysis of the balance sheet for Year 4 and Year 3. Note: Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).

ROONEY COMPANY Horizontal Analysis of Balance Sheets Year 4 Year 3 % Change Assets Current assets Cash $16,500 $13,800 % Marketable securities 21,500 7,200 Accounts receivable (net) 55,700 46,400 Inventories 136,100 143,600 Prepaid items 25,900 11,600 Total current assets 255,700 222,600 Investments 27,500 21,700 Plant (net) 271,100 255,900 Land 29,100 24,300 Total long-term assets 327,700 301,900 Total assets $583,400 $524,500 Liabilities and Stockholders Equity Liabilities Current liabilities Notes payable $16,000 $4,400 Accounts payable 112,600 99,200 Salaries payable 20,300 13,100 Total current liabilities 148,900 116,700 Noncurrent liabilities Bonds payable 99,100 99,100 Other 30,900 25,700 Total noncurrent liabilities 130,000 124,800 Total liabilities 278,900 241,500 Stockholders' equity Preferred stock (par value $10, 4% cumulative, nonparticipating; 6,100 shares authorized and issued) 61,000 61,000 Common stock (no par; 50,000 shares authorized; 10,000 shares issued) 61,000 61,000 Retained earnings 182,500 161,000 Total stockholders' equity 304,500 283,000 Total liabilities & stockholders equity $583,400 $524,500 %

b. Prepare a horizontal analysis of the income statement for Year 4 and Year 3. Note: Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).

ROONEY COMPANY Horizontal Analysis of Income Statements Year 4 Year 3 % Change Revenues Sales (net) $230,100 $211,600 % Other revenues 9,000 5,900 Total revenues 239,100 217,500 Expenses Cost of goods sold 118,900 101,600 Selling, general, and administrative expenses 53,300 49,100 Interest expense 6,000 5,200 Income tax expense 21,300 20,300 Total expenses 199,500 176,200 Net income (loss) $39,600 $41,300 %

Answer & Explanation Solved by verified expert

See Answer