BU330 Accounting for Managers assignment 8
BU330 Accounting for Managers assignment 8
Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the "Assignment Format" page for specific format requirements.
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.
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Sanborn Corporation |
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Comparative Income Statements |
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For the Years Ended December 31, 20x8 and 20x7 |
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(in thousands of dollars) |
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20x8 |
20x7 |
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Net sales |
$3,276,800 |
$3,146,400 |
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Cost of goods sold |
2,088,800 |
2,008,400 |
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Gross margin |
$1,188,000 |
$1,138,000 |
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Operating expenses |
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Selling expenses |
$ 476,800 |
$ 518,000 |
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Administrative expenses |
447,200 |
423,200 |
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Total operating expenses |
$ 924,000 |
$ 941,200 |
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Income from operations |
$ 264,000 |
$ 196,800 |
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Interest expense |
65,600 |
39,200 |
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Income before income taxes |
$ 198,400 |
$ 157,600 |
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Income taxes expense |
62,400 |
56,800 |
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Net income |
$ 136,000 |
$ 100,800 |
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Earnings per share |
$3.40 |
$2.52 |
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Sanborn Corporation |
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Comparative Balance Sheets |
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December 31, 20x8 and 20x7 |
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20x8 |
20x7 |
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Assets |
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Cash |
$ 81,200 |
$ 40,800 |
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Accounts receivable (net) |
235,600 |
229,200 |
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Inventory |
574,800 |
594,800 |
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Property, plant, and |
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equipment (net) |
750,000 |
720,000 |
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Total assets |
$1,641,600 |
$1,584,800 |
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Liabilities and Stockholders' Equity |
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Accounts payable |
$ 267,600 |
$ 477,200 |
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Notes payable (short-term) |
200,000 |
400,000 |
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Bonds payable |
400,000 |
— |
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Common stock, $10 par value |
400,000 |
400,000 |
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Retained earnings |
374,000 |
307,600 |
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Total liabilities and |
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stockholders' equity |
$1,641,600 |
$1,584,800 |
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)
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Sanborn Corporation |
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Comparative Income Statements |
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For the Years Ended December 31, 20x8 and 20x7 |
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(in thousands of dollars) |
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20x8 |
20x7 |
Increase or Decrease |
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Amount |
Percentage |
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Net sales |
$3,276,800 |
$3,146,400 |
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Cost of goods sold |
2,088,800 |
2,008,400 |
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Gross margin |
$1,188,000 |
$1,138,000 |
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||
|
Operating expenses |
|
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Selling expenses |
$ 476,800 |
$ 518,000 |
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Administrative expenses |
447,200 |
423,200 |
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Total operating expenses |
$ 924,000 |
$ 941,200 |
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Income from operations |
$ 264,000 |
$ 196,800 |
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Interest expense |
65,600 |
39,200 |
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Income before income taxes |
$ 198,400 |
$ 157,600 |
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Income taxes expense |
62,400 |
56,800 |
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Net income |
$ 136,000 |
$ 100,800 |
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Earnings per share |
$3.40 |
$2.52 |
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Sanborn Corporation |
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Comparative Balance Sheets |
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December 31, 20x8 and 20x7 |
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20x8 |
20x7 |
Increase or Decrease |
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Amount |
Percentage |
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Assets |
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Cash |
$ 81,200 |
$ 40,800 |
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Accounts receivable (net) |
235,600 |
229,200 |
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Inventory |
574,800 |
594,800 |
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Property, plant, and |
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equipment (net) |
750,000 |
720,000 |
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Total assets |
$1,641,600 |
$1,584,800 |
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Liabilities and Stockholders' Equity |
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Accounts payable |
$ 267,600 |
$ 477,200 |
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Notes payable (short-term) |
200,000 |
400,000 |
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Bonds payable |
400,000 |
— |
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Common stock, $10 par value |
400,000 |
400,000 |
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Retained earnings |
374,000 |
307,600 |
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Total liabilities and |
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stockholders' equity |
$1,641,600 |
$1,584,800 |
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2. Using the forms below, prepare common-size income statements and balance sheets for 20x7 and 20x8 (40 points)
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Sanborn Corporation |
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Common-Size Income Statements |
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For the Years Ended December 31, 20x8 and 20x7 |
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20x8 |
20x7 |
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Net sales |
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Cost of goods sold |
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Gross margin |
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Operating expenses |
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Selling expenses |
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Administrative expenses |
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Total operating expenses |
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Income from operations |
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Interest expense |
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Income before income taxes |
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Income taxes expense |
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Net income |
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Sanborn Corporation |
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Common-Size Balance Sheets |
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December 31, 20x8 and 20x7 |
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20x8 |
20x7 |
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Assets |
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Cash |
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Accounts receivable (net) |
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Inventory |
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Property, plant, and equipment (net) |
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Total assets |
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Liabilities and Stockholders' Equity |
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Accounts payable |
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Notes payable (short-term) |
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Bonds payable |
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Common stock, $10 par value |
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Retained earnings |
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Total liabilities and stockholders' equity |
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3. Comment on the results in requirements 1 and 2 by indentifying favorable and unfavorable changes in the components and composition of the statements. (30 points)
This is the end of Assignment 08.
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Rating:
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Solution: BU330 Accounting for Managers assignment 8