Question

. Complete the two final columns shown beside each item in Pinnacle Plus's comparative financial statements. (Decreases should be indicated by a minus sign. Round your percentage values to 1 decimal place.) PINNACLE PLUS Horizontal Analysis Increase (Decrease) in the Current year (versus Previous year) Current Year Previous Year Amount Percentage Income Statement Sales Revenue $116,000 $103,200 % Cost of Goods Sold 53,200 48,600 Gross Profit 62,800 54,600 Operating Expenses 39,000 34,500 Interest Expense 4,600 4,600 Income before Income Tax Expense 19,200 15,500 Income Tax Expense (30%) 5,760 4,650 Net Income $13,440 $10,850 % Balance Sheet Cash $68,340 $34,800 % Accounts Receivable, Net 18,200 10,800 Inventory 25,600 39,200 Property and Equipment, Net 95,600 108,000 Total Assets $207,740 $192,800 % Accounts Payable $43,200 $35,600 % Income Tax Payable 2,200 1,100 Note Payable (long-term) 46,000 46,000 Total Liabilities 91,400 82,700 Common Stock (par $10) 82,000 82,000 Retained Earnings† 34,340 28,100 Total Liabilities and Stockholders’ Equity $207,740 $192,800 % †During the current year, cash dividends amounting to $7,200 were declared and paid.

2-a. Which account increased by the largest dollar amount?

2-b. Which account increased by the largest percentage?

Answer 1

Income statement
	Current year	Previous Year	Change in Dollars	Change in %
Sales revenue	$ 1,16,000.00	$ 1,03,200.00	$   12,800.00	12.4%
Cost of goods sold	$      53,200.00	$      48,600.00	$      4,600.00	9.5%
Gross profit	$      62,800.00	$      54,600.00	$      8,200.00	15.0%
Operating expenses	$      39,000.00	$      34,500.00	$      4,500.00	13.0%
Interest Expense	$        4,600.00	$        4,600.00	$                   -	0.0%
Income before income tax expense	$      19,200.00	$      15,500.00	$      3,700.00	23.9%
Income tax expense	$        5,760.00	$        4,650.00	$      1,110.00	23.9%
Net income	$      13,440.00	$      10,850.00	$      2,590.00	23.9%

Balance sheet
	Current year	Previous Year	Change in Dollars	Change in %
Assets
Cash	$      68,340.00	$      34,800.00	$   33,540.00	96.4%
Accounts receivables	$      18,200.00	$      10,800.00	$      7,400.00	68.5%
Inventory	$      25,600.00	$      39,200.00	$ (13,600.00)	-34.7%
Property land and equipment, Net	$      95,600.00	$ 1,08,000.00	$ (12,400.00)	-11.5%
Total Assets	$ 2,07,740.00	$ 1,92,800.00	$   14,940.00	7.7%
Liabilities
Accounts payable	$      43,200.00	$      35,600.00	$      7,600.00	21.3%
Income tax payable	$        2,200.00	$        1,100.00	$      1,100.00	100.0%
Note payable(Long term)	$      46,000.00	$      46,000.00	$                   -	0.0%
Total Liabilities	$      91,400.00	$      82,700.00	$      8,700.00	10.5%
Shareholder's Equity
Common stock	$      82,000.00	$      82,000.00	$                   -	0.0%
Retained earnings	$      34,340.00	$      28,100.00	$      6,240.00	22.2%
Total Shareholder's equity	$ 1,16,340.00	$ 1,10,100.00	$      6,240.00	5.7%
Total liabilities and shareholder's equity	$ 2,07,740.00	$ 1,92,800.00	$   14,940.00	7.7%

Requirement 2a

Cash account increased by largest dollar amount of $ 33,540

Requirement 2b

Income tax payable increased by Highest % of 100.0%