Question

1. Complete a common size statement for the Income Statement and Balance Sheet. 2. Please give the dollar amount of change and percentage change in each of the following accounts from 2018 and 2019.

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C17 Assignment for 35 points. There are two problems PUT YOUR ANSWERS ON A SEPARATE SHEET OF PAPER 1. Common Size Statements and 2. Horizonal Analysis 1. Complete a common size statement for the Income Statement and Balance Sheet Income Statement For the year ending December 31, 2019 Net Sales $ 2,500,000 1.000.000 1,500,000 Cost of Goods Sold Gross Profit Operating Expenses Depreciation Expense Sales Salaries Expense $ 30,000 318,500 Rent Expense Office Supplies Expense Insurance Expense 208,100 25,000 228,000 131,800 50,000 Advertising Expense Interest Expense Total Expenses __991,400 Net Income $ 508,600

Answer 1

Correct Answer:

Requirement 1:

Note: All the Amounts Are Expressed as a percentage of Net Sales. It can be calculated by dividing the amount by net sales and then multiplying by 100

Common size Income Statement
For the year ending December 31, 2019
	$	%
Net Sale	$        25,00,000	100.0%
Cost of goods sold	$        10,00,000	40.0%
Gross profit	$        15,00,000	60.0%
Operating Expenses
Depreciation Expenses	$              30,000	1.2%
Sales Salaries Expense	$          3,18,500	12.7%
Rent Expense	$          2,08,100	8.3%
Office supplies Expense	$              25,000	1.0%
Insurance Expense	$          2,28,000	9.1%
Advertising Expense	$          1,31,800	5.3%
Interest Expense	$              50,000	2.0%
Total Expense	$          9,91,400	39.7%
Net Income	$          5,08,600	20.3%

Note: All the Amounts Are Expressed as a percentage of Total Assets. It can be calculated by dividing the amount by Total assets and then multiplying by 100

Common size Balance sheet
For the year ended December 31, 2019
	$	%
Cash	$              25,208	0.7%
A/R	$          1,25,000	3.4%
Short Term Investments	$              75,000	2.0%
Inventory	$        15,00,000	40.3%
Equipment, Net	$        20,00,000	53.7%
Total Assets	$        37,25,208	100.0%
A/P	$          1,50,200	4.0%
N/P	$        10,00,500	26.9%
Total Liabilities	$        12,00,700	32.2%
Common Stock	$        11,25,008	30.2%
Paid-in Capital	$              15,000	0.4%
Retained Earnings	$          2,33,600	6.3%
Total Liabilities and Owner's Equity	$        37,25,008	100.0%

Requirement 2:

Comparative balance sheet
For the year 2018-2019
	A	B	C =B-A	D =C/A*100
	2018	2019	$ change	% Change
Cash	2000	3500	$            1,500.00	75.0%
A/R	4500	1200	$          (3,300.00)	-73.3%
Short Term Investments	6710	8210	$            1,500.00	22.4%
Inventory	20465	30420	$            9,955.00	48.6%
Equipment, Net	1234000	1000500	$    (2,33,500.00)	-18.9%
A/P	23000	65000	$          42,000.00	182.6%
N/P	40500	35700	$          (4,800.00)	-11.9%
Common Stock	100670	150670	$          50,000.00	49.7%
Retained Earnings	450000	457000	$            7,000.00	1.6%

End of answer.

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