Question

Music Magic Income Statement For the Year Ended December 31st, 2019 2019 2018 Revenues Service Revenue $6,500 $6,000 Expenses Advertising Expense $800 $750 Depreciation Expense 400 350 Interest Expense 100 100 Rent Expense 500 500 Salaries Expense 2,400 2,200 Supplies Expense 900 800 Total Expenses $5,100 $4,700 Net Income $1,400 $1,300

You will need to complete a horizontal analysis on the income statement and a vertical analysis on the Balance sheet. The information for the assignment can be found in the excel document provided. Please complete the analyses in a copy of the excel document, including your formulas.

Answer 1

HORIZONTAL ANALYSIS
	2019	2018	Absolute change	% change
Revenues
Service Revenue	$ 6,500	$ 6,000	$                   500	8.33%
Expenses
Advertising Expense	$    800	$     750	$                     50	6.67%
Depreciation Expense	$    400	$     350	$                     50	14.29%
Interest Expense	$    100	$     100	$                      -	0.00%
Rent Expense	$    500	$     500	$                      -	0.00%
Salaries Expense	$ 2,400	$ 2,200	$                   200	9.09%
Supplies Expense	$    900	$     800	$                   100	12.50%
Total Expenses	$ 5,100	$ 4,700	$                   400	8.51%
Net Income	$ 1,400	$ 1,300	$                   100	7.69%
VERTICAL ANALYSIS
	2019	2019 (%)	2018	2018 (%)
Revenues
Service Revenue	$ 6,500	100.00%	$                6,000	100.00%
Expenses
Advertising Expense	$    800	12.31%	$                   750	12.50%
Depreciation Expense	$    400	6.15%	$                   350	5.83%
Interest Expense	$    100	1.54%	$                   100	1.67%
Rent Expense	$    500	7.69%	$                   500	8.33%
Salaries Expense	$ 2,400	36.92%	$                2,200	36.67%
Supplies Expense	$    900	13.85%	$                   800	13.33%
Total Expenses	$ 5,100	78.46%	$                4,700	78.33%
Net Income	$ 1,400	21.54%	$                1,300	21.67%

Calculations: