Question

PINNACLE PLUS Horizontal Analysis Increase (Decrease) in the Current year (versus Previous year) Current Year Previous Year Amount Percentage Income Statement Sales Revenue $120,000 $106,000 % Cost of Goods Sold 54,000 49,000 Gross Profit 66,000 57,000 Operating Expenses 41,000 35,500 Interest Expense 5,000 5,000 Income before Income Tax Expense 20,000 16,500 Income Tax Expense (30%) 6,000 4,950 Net Income $14,000 $11,550 % Balance Sheet Cash $77,900 $43,000 % Accounts Receivable, Net 19,000 10,000 Inventory 26,000 40,000 Property and Equipment, Net 96,000 110,000 Total Assets $218,900 $203,000 % Accounts Payable $44,000 $36,000 % Income Tax Payable 3,000 1,500 Note Payable (long-term) 50,000 50,000 Total Liabilities 97,000 87,500 Common Stock (par $10) 87,000 87,000 Retained Earnings† 34,900 28,500 Total Liabilities and Stockholders’ Equity $218,900 $203,000 % †During the current year, cash dividends amounting to $7,600 were declared and paid.

Answer 1

Horizontal Analysis
Income Statement
Increase (Decrease) in the Current year (versus Previous year)
	Current Year	Previous Year	Amount	%
1	2	3	4=(2-3)	5=(4/3)
Sales Revenue	120000	106000	14000	13.21%
Less: COGS	54000	49000	5000	10.20%
Gross profit	66000	57000	9000	15.79%
Less: Operating expenses	41000	35500	5500	15.49%
Less:Interest expense	5000	5000	0	0.00%
Income before Income-tax expense	20000	16500	3500	21.21%
Less: Income Tax expense(30%)	6000	4950	1050	21.21%
Net Income	14000	11550	2450	21.21%

Balance Sheet
	Current Year	Previous Year	Amount	% change from previous year
Assets
Cash	77900	43000	34900	81.16%
Accounts Receivables,net	19000	10000	9000	90.00%
Inventory	26000	40000	-14000	-35.00%
PP&E, Net	96000	110000	-14000	-12.73%
Total Assets	218900	203000	15900	7.83%
Liabilities & Stockholders' Equity
Accounts Payable	44000	36000	8000	22.22%
Income Tax payable	3000	1500	1500	100.00%
Note payable(long-term)	50000	50000	0	0.00%
Total Liabilities	97000	87500	9500	10.86%
Common stock(par $ 10)	87000	87000	0	0.00%
Retained Earnings	34900	28500	6400	22.46%
Total stockholders' equity	121900	115500	6400	5.54%
Total liabilities & Stockholders' Equity	218900	203000	15900	7.83%