BU330 Accounting for Managers - Assignment 8 - Ashworth College

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Horizontal and Vertical Analysis

 

 

Sanborn Corporation’s condensed comparative income statements for 20x8 and 20x7 appear below.  The corporation’s condensed comparative balance sheets for 20x8 and 20x7 appear on the next page.

 

 
 
 
 
 

Sanborn Corporation

Comparative Income Statements

For the Years Ended December 31, 20x8 and 20x7

(in thousands of dollars)

 

20x8

20x7

Net sales

$3,276,800

$3,146,400

Cost of goods sold

2,088,800

2,008,400

Gross margin

$1,188,000

$1,138,000

Operating expenses

 

 

 

Selling expenses

$  476,800

$  518,000

 

Administrative expenses

447,200

423,200

 

Total operating expenses

$  924,000

$  941,200

Income from operations

$  264,000

$  196,800

Interest expense

65,600

39,200

Income before income taxes

$  198,400

$  157,600

Income taxes expense

62,400

56,800

Net income

$  136,000

$  100,800

Earnings per share

$3.40

$2.52

a
 
 

Sanborn Corporation

Comparative Balance Sheets

December 31, 20x8 and 20x7

 

20x8

20x7

Assets

Cash

 $   81,200

 $   40,800

Accounts receivable (net)

    235,600

    229,200

Inventory

    574,800

    594,800

Property, plant, and

 

 

equipment (net)

    750,000

    720,000

Total assets

 $1,641,600

 $1,584,800

 

Liabilities and Stockholders' Equity

Accounts payable

 $  267,600

 $  477,200

Notes payable (short-term)

    200,000

    400,000

Bonds payable

    400,000

      —   

Common stock, $10 par value

    400,000

    400,000

Retained earnings

    374,000

    307,600

Total liabilities and

 

 

stockholders' equity

 $1,641,600

 $1,584,800

a
 

1. Prepare schedules showing the amount and percentage changes from 20x7 to 20x8 for the comparative income statements and the balance sheets.  You may use the forms below. (40 points)

 
 

Sanborn Corporation

Comparative Income Statements

For the Years Ended December 31, 20x8 and 20x7

(in thousands of dollars)

 

20x8

20x7

 Increase or Decrease

Amount

Percentage

Net sales

 $3,276,800

 $3,146,400

 

 

Cost of goods sold

  2,088,800

  2,008,400

 

 

Gross margin

 $1,188,000

 $1,138,000

 

 

Operating expenses

 

 

 

 

 

Selling expenses

 $  476,800

 $  518,000

 

 

 

Administrative expenses

    447,200

    423,200

 

 

 

Total operating expenses

 $  924,000

 $  941,200

 

 

Income from operations

 $  264,000

 $  196,800

 

 

Interest expense

     65,600

     39,200

 

 

Income before income taxes

 $  198,400

 $  157,600

 

 

Income taxes expense

     62,400

     56,800

 

 

Net income

 $  136,000

 $  100,800

 

 

Earnings per share

 $3.40

 $2.52

 

 

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