Having trouble with this problem Comprehensive Problem 2 St

Having trouble with this problem

Comprehensive Problem 2 - St of Cash Flows and Ratios Algo R. Allen Inc. Income Statement For years ended December 31, 2017 and 2018 R. Allen Inc. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Change 2018 2017 Current assets $50,270 (321.000) (263.000 Accounts receivable (net) 38,000 44,000 1,200 1700 135,170 $528,000 $475,000 Cash Sales (all on credit) Cost of goods sold $31,700 $18,570 32,000 6,000 42,000 2,000 2,700 -1,500 2,600 -900 111,000 24,170 02:51:07Gross margin 207000 212,000 nventory Prepaid expenses Depreciation expense Other operating expenses Total operating expenses Operating income 37,000 51,000 Other current assets 114000 95000 otal current assets 151,000 146,000 56,000 66000 Long-term Investments eBook 81,000 56,000 25,000 References Other income (expenses) Interest expense 307,000 (77.800) 229,200 445,370 Plant assets Less: accumulated depreciation 257000 50,000 (51,000) 26,800 206,000 23,200 373,000 72,370 Gain on sale of investments Loss on sale of plant assets Total other income (expenses) 5,500 3,900 Total plant assets (2,700) 3.200) Total assets (12,900 (2,800) Current liabilities Income before income taxes Income taxes expense Net income $25,500 54100 63,200 Accounts payable (16.230 18,960) Accrued liabilities $37,870 $44 240Income taxes payable 3,600 4 30,500 $26,000 $-500 3,000 600 5,000 3,600 34,000 3,500 Total current liabilities R. Allen Inc. Statement of Retained Earnings For the year ended December 31, 2018 Long term liabilities 236,000 266,500 Notes Payable 175,000 61,000 209,000 57,500 Total liabilities 2018 2017 Ret. earnings, Jan. 1 $26,000 $O Stockholders\' equity

Solution

Solution:

Horizontal Analysis of Partial Income Statement

R. Allen Inc.

Partial Income Statement (Horizontal Analysis)

For the years ended December 31, 2017 and 2018

Increase / Decrease

2018

2017

(B)

Amount

(A)

Percent

(A/B*100)

Sales

$528,000

$475,000

$53,000

(528000 – 475000)

11.16%

(53,000/ 475,000*100)

Cost of Goods Sold

$321,000

$263,000

$58,000

(321000 – 263000)

22.05%

(58000/263000*100)

Gross Margin

$207,000

$212,000

-$5,000

(207000 – 212,000)

-2.36%

(-5000/212000*100)

Expenses

Depreciation Expense

$37,000

$51,000

-$14,000

(37000 – 51000)

-27.45%

Other operating expenses

$114,000

$95,000

$19,000

(114000 – 95000)

20.00%

Total Operating expenses

$151,000

$146,000

$5,000

(151000 – 146000)

3.42%

Operating Income

$56,000

$66,000

-$10,000

(56000 – 66000)

-15.15%

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R. Allen Inc.
Partial Income Statement (Horizontal Analysis)
For the years ended December 31, 2017 and 2018
			Increase / Decrease
	2018	2017 (B)	Amount (A)	Percent (A/B*100)
Sales	$528,000	$475,000	$53,000 (528000 – 475000)	11.16% (53,000/ 475,000*100)
Cost of Goods Sold	$321,000	$263,000	$58,000 (321000 – 263000)	22.05% (58000/263000*100)
Gross Margin	$207,000	$212,000	-$5,000 (207000 – 212,000)	-2.36% (-5000/212000*100)
Expenses
Depreciation Expense	$37,000	$51,000	-$14,000 (37000 – 51000)	-27.45%
Other operating expenses	$114,000	$95,000	$19,000 (114000 – 95000)	20.00%
Total Operating expenses	$151,000	$146,000	$5,000 (151000 – 146000)	3.42%
Operating Income	$56,000	$66,000	-$10,000 (56000 – 66000)	-15.15%