Question

Horizontal Analysis of Comparative Financial Statements

Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as follows:

Miller Electronics Corporation Comparative Income Statement For Years Ended December 31, 20-2 and 20-1
	20-2		20-1
Net Sales (all on account)		$652,630		$416,530
Cost of goods sold		387,960		250,560
Gross profit		$264,670		$165,970
Administrative expenses		$65,676		$42,758
Selling expenses		66,261		43,915
Total operating expenses		$131,937		$86,673
Operating income		$132,733		$79,297
Interest expense		1,331		1,241
Income before income taxes		$131,402		$78,056
Income tax expense		31,171		14,417
Net income		$100,231		$63,639

Miller Electronics Corporation Comparative Balance Sheet December 31, 20-2 and 20-1
	20-2		20-1
Assets
Current assets:
Cash		$42,195		$21,511
Receivables (net)		73,929		47,430
Merchandise inventory		91,312		50,122
Supplies and prepayments		3,644		1,109
Total current assets		$211,080		$120,172
Property, plant, and equipment:
Office equipment (net)		$12,426		$8,770
Factory equipment (net)		105,101		71,290
Total property, plant, and equipment		$117,527		$80,060
Total assets		$328,607		$200,232
Liabilities
Current liabilities
Notes payable		$10,320		$5,820
Accounts payable		43,063		30,115
Accrued and withheld payroll taxes		6,472		5,572
Total current liabilities		$59,855		$41,507
Stockholders' Equity
Common stock ($10 par)		$100,000		$84,000
Retained earnings		168,752		74,725
Total stockholders' equity		$268,752		$158,725
Total liabilities and stockholders' equity		$328,607		$200,232

Required:

Prepare a horizontal analysis. Add columns to show the amount of increase (decrease) and the percentage change. Round percentages to one decimal place. Do not enter the percent sign. For example, 60% would be entered as 60.

Miller Electronics Corporation
Comparative Income Statement
For Years Ended December 31, 20-2 and 20-1
	20-2 Amount	20-1 Amount	Increase (Decrease)	Percent
Net sales (all on account)	$652,630	$416,530	$
Cost of goods sold	387,960	250,560
Gross profit	$264,670	$165,970	$
Administrative expenses	$65,676	$42,758	$
Selling expenses	66,261	43,915
Total operating expenses	$131,937	$86,673	$
Operating income	$132,733	$79,297	$
Interest expense	1,331	1,241
Income before income taxes	$131,402	$78,056	$
Income tax expense	31,171	14,417
Net income	$100,231	$63,639	$

Miller Electronics Corporation
Comparative Balance Sheet
December 31, 20-2 and 20-1
Assets
	20-2 Amount	20-1 Amount	Increase (Decrease)	Percent
Current assets:
Cash	$42,195	$21,511	$
Receivables (net)	73,929	47,430
Merchandise inventory	91,312	50,122
Supplies and prepayments	3,644	1,109
Total current assets	$211,080	$120,172	$
Property, plant, and equipment:
Office equipment (net)	$12,426	$8,770	$
Factory equipment (net)	105,101	71,290
Total prop., plant, and equip.	$117,527	$80,060	$
Total assets	$328,607	$200,232	$
Liabilities
Current liabilities:
Notes payable	$10,320	$5,820	$
Accounts payable	43,063	30,115
Accrued and withheld payroll taxes	6,472	5,572
Total current liabilities	$59,855	$41,507	$
Stockholders' Equity
Common stock ($10 par)	$100,000	$84,000	$
Retained earnings	168,752	74,725
Total stockholders’ equity	$268,752	$158,725	$
Total liab. and stockholders’ equity	$328,607	$200,232	$

Answer 1

Miller Electronics Corporation
Comparative Income Statement
For Years Ended December 31, 20-2 and 20-1
	20-2 Amount	20-1 Amount	Increase (Decrease)	Percent
Net sales (all on account)	652630	416530	236100	56.7
Cost of goods sold	387960	250560	137400	54.8
Gross profit	264670	165970	98700	59.5
Administrative expenses	65676	42758	22918	53.6
Selling expenses	66261	43915	22346	50.9
Total operating expenses	131937	86673	45264	52.2
Operating income	132733	79297	53436	67.4
Interest expense	1331	1241	90	7.3
Income before income taxes	131402	78056	53346	68.3
Income tax expense	31171	14417	16754	116.2
Net income	100231	63639	36592	57.5
Miller Electronics Corporation
Comparative Balance Sheet
December 31, 20-2 and 20-1
Assets
	20-2 Amount	20-1 Amount	Increase (Decrease)	Percent
Current assets:
Cash	42195	21511	20684	96.2
Receivables (net)	73929	47430	26499	55.9
Merchandise inventory	91312	50122	41190	82.2
Supplies and prepayments	3644	1109	2535	228.6
Total current assets	211080	120172	90908	75.6
Property, plant, and equipment:
Office equipment (net)	12426	8770	3656	41.7
Factory equipment (net)	105101	71290	33811	47.4
Total prop., plant, and equip.	117527	80060	37467	46.8
Total assets	328607	200232	128375	64.1
Liabilities
Current liabilities:
Notes payable	10320	5820	4500	77.3
Accounts payable	43063	30115	12948	43.0
Accrued and withheld payroll taxes	6472	5572	900	16.2
Total current liabilities	59855	41507	18348	44.2
Stockholders' Equity
Common stock ($10 par)	100000	84000	16000	19.0
Retained earnings	168752	74725	94027	125.8
Total stockholders’ equity	268752	158725	110027	69.3
Total liabilities and stockholders' equity	328607	200232	128375	64.1