Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 28E
The following data (in millions) are taken from recent financial statements of Nike Inc.:
- a. Determine the amount of change (in millions) and percent of change in net income for Year 2. Round to one decimal place.
- b. Determine the percentage relationship between net income and net sales (net income divided by net sales) for Year 2 and Year 1. Round to one decimal place.
- c. What conclusions can you draw from your analysis?
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Income statements for Campbell Company for Year 3 and Year 4 follow:
CAMPBELL COMPANY
Income Statements
Year 4
Year 3
$180,800
120,400
19,900
14,500
Sales
$200,800
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
142,400
21,900
12,500
3,900
$180,700
5,900
$160,700
20,100
3,700
Income before taxes
20,100
Income taxes expense
6,500
Net income
$ 13,600
$ 16,400
Required
a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4.
b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year
4. (Negative answers should be indicated by a minus sign. Round your percentage answers to 1 decimal place. (i.e., 0.234
should be entered…
A. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place.
B. What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.
Perform the Reperformance or Recalculation procedures to check the mathematical accuracy ofthe Income Statement. What issue did you find? What is the next step? Create a Correctedversion of the Income Statement.
Income Statement
For the Year Ended
For the Year Ended
Revenue
3/31/2021
3/31/2022
Sales Revenue: Corporate Accounts
$ 353,739.57
$ 343,050.56
Sales Revenues: Storefront
$ 80,649.00
$ 91,411.50
Total Sales Revenue
$ 434,388.57
$ 434,462.06
Cost of Goods Sold: Ingredients
$ 69,736.39
$ 64,645.64
Cost of Goods Sold: Boxes and Cupcake Cups
$ 3,875.55
$ 3,755.55
Cost of Goods Sold: Beverages
$ 5,466.50
$ 5,681.50
Total COGS
$ 76,078.44
$ 74,082.69
Gross Profit
$ 358,310.13
$ 360,379.37
Interest Revenue
$…
Chapter 3 Solutions
Financial Accounting
Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (a) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - Prob. 7DQCh. 3 - Does every adjusting entry affect net income for a...Ch. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Indicate with a Yes or No whether or not each of...Ch. 3 - Indicate with a Yes or No whether or not each of...Ch. 3 - Classify the following items as (1) prepaid...Ch. 3 - Classify the following items as (1) prepaid...Ch. 3 - The supplies account had a beginning balance of...Ch. 3 - The prepaid insurance account had a beginning...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - Prob. 4PEBCh. 3 - At the end of the current year, 23,570 of fees...Ch. 3 - At the end of the current year, 17,555 of fees...Ch. 3 - We-Sell Realty Co. pays weekly salaries of 11,800...Ch. 3 - Prospect Realty Co. pays weekly salaries of 27,600...Ch. 3 - Prob. 7PEACh. 3 - The estimated amount of depreciation on equipment...Ch. 3 - For the year ending August 31, 2016, Mammalia...Ch. 3 - For the year ending April 30, 2016, Urology...Ch. 3 - For each of the following errors, considered...Ch. 3 - For each of the following errors, considered...Ch. 3 - Prob. 10PEACh. 3 - Prob. 10PEBCh. 3 - Classify the following items as (a) prepaid...Ch. 3 - The following accounts were taken from the...Ch. 3 - The balance in the supplies account, before...Ch. 3 - The supplies and supplies expense accounts at...Ch. 3 - At March 31, the end of the first month of...Ch. 3 - The balance in the prepaid insurance account,...Ch. 3 - The prepaid insurance account had a balance of...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - Prob. 9ECh. 3 - At the end of the current year, 22,650 of fees...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - The adjusting entry for accrued fees was omitted...Ch. 3 - Ocular Realty Co. pays weekly salaries of 16,600...Ch. 3 - Prob. 14ECh. 3 - Accrued salaries owed to employees for October 30...Ch. 3 - Assume that the error in Exercise 3-15 was not...Ch. 3 - Art Imaging Company was organized on April 1 of...Ch. 3 - The estimated amount of depreciation on equipment...Ch. 3 - The balance in the equipment account is...Ch. 3 - Prob. 20ECh. 3 - For a recent period, the balance sheet for Costco...Ch. 3 - Prob. 22ECh. 3 - The accountant for Healthy Life Company, a medical...Ch. 3 - If the net income for the current year had been...Ch. 3 - On December 31, a business estimates depreciation...Ch. 3 - The unadjusted and adjusted trial balances for...Ch. 3 - The accountant for Evas Laundry prepared the...Ch. 3 - The following data (in millions) are taken from...Ch. 3 - Prob. 29ECh. 3 - On March 31, 2016, the following data were...Ch. 3 - Selected account balances before adjustment for...Ch. 3 - Reliable Repairs Service, an electronics repair...Ch. 3 - Good Note Company specializes in the repair of...Ch. 3 - Rowland Company is a small editorial services...Ch. 3 - At the end of April, the first month of...Ch. 3 - Prob. 1PBCh. 3 - Selected account balances before adjustment for...Ch. 3 - Crazy Mountain Outfitters Co., an outfitter store...Ch. 3 - The Signage Company specializes in the maintenance...Ch. 3 - Reece Financial Services Co., which specializes in...Ch. 3 - At the end of August, the first month of...Ch. 3 - The unadjusted trial balance that you prepared for...Ch. 3 - Daryl Kirby opened Squid Realty Co. on January 1,...Ch. 3 - Prob. 2CPCh. 3 - Prob. 3CP
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- The following data (in millions) are taken from the financial statements of Target Corporation: a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?arrow_forward= The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Prime Fish Balance sheet Cash Accounts receivable (net) Inventory Property & equipment (net) Other assets Total assets Current liabilities Long-term debt (interest rate: 15%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity Income statement Sales revenue (1/2 on credit) Cost of goods sold Operating expenses Net income Other data Per share stock price at end of current year Blue Water $ 42,300 44,500 92,500 159,500 85,300 $ 424,100 $ 92,500 74,100 157,100 30,300 70,100 $ 424,100 $ 427,500 (234,500) (163,600) $ 29,400 $ 23.3 45% $ 19,700 34,900 47,800 416,600 318,000 $ 34,300 $ 837,000 $ 68,500 62,600 525,000 107,300 73,600 $ 837,000 $ 789,000 (401,300) (312,300) $ 75,400 $28 45% Average income tax rate Dividends declared and paid in current year Both companies are in the fish catching and manufacturing business.…arrow_forwardComplete this question by entering your answers in the tabs below. Analysis Analysis Bal Sheet Inc Stmt Prepare a vertical analysis of an income statements for Year 4 and Year 3. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) Revenues Sales (net) Other revenues Total revenues Expenses Cost of goods sold FANNING COMPANY Vertical Analysis of Income Statements Year 4 Selling, general, and administrative expense Interest expense Income tax expense Total expenses Net income Amount $ 231,900 9,300 241,200 118,800 54,200 6,800 22,800 202,600 $ 38,600 Percentage of Total Analysis Bal Sheet % % Year 3 Amount $ 211,200 6,400 217,600 102,100 49,100 6,000 21,800 179,000 $ Percentage of Total % % 38,600 Analysis Inc Stmt > Show lessarrow_forward
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How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License