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Tiger Audio declared and paid a cash dividend of $5,725 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:



Required:

1. Complete the two final columns shown beside each item in Tiger Audio’s comparative financial statements.

2-a. Which account increased by the largest dollar amount?

2-b. Which account increased by the largest percentage?

Respuesta :

anthougo

1. The completion of the two final columns in Tiger Audio's comparative financial statements is as below:

2-a. The account that increased by the largest dollar amount is the Sales Revenue (by $41,000).

2-b. The account that increased by the largest percentage is the Retained Earnings (by 64%, except the income before tax, income tax expense, and net income).

How is the horizontal analysis of the two final columns in Tiger Audio's comparative financial statements performed?

The horizontal analysis of the two final columns in Tiger Audio's comparative financial statements can be performed as follows:

  1. Deduct the previous figure from the current to obtain the dollar amount.
  2. Use the dollar amount (difference) above to divide by the previous figure and then multiply by 100 to obtain the percentage change.

Data and Calculations:

Tiger Audio's comparative financial statements:

                                                                                  Horizontal Analysis

                                              Current     Previous   $ Amount      Percent %

Income Statement

Sales Revenue                    $228,000  $187,000     $41,000         22%

Cost of goods sold                134,000     115,000        18,000         16%

Gross Profit                             94,000      72,000       22,000         31%

Operating Expenses              39,000      42,000        (3,000)         -7%

Interest Expense                      5,000        4,000          1,000         25%

Income before Income Tax  50,000      26,000       24,000         92%

Income Tax Expense (30%)   15,000        7,800          7,200         92%

Net income                          $35,000    $18,200        16,800         92%

Balance Sheet

Cash                                    $28,000   $30,000      -$2,000          7%

Accounts Receivable, net     18,000      16,000         2,000         12.5%

Inventory                               25,000     22,000         3,000         13.6%

Property & Equipment, net 139,000   125,000        14,000         11.2%

Total Assets                      $210,000 $193,000        17,000          8.8%

Accounts Payable                26,500    25,000          1,500            6%

Income Tax Payable              4,000      4,000                 0             0%

Note Payable (long-term)    76,500    89,000       -12,500         -14%

Total liabilities                  $107,000 $118,000        -11,000         -9%

Common Stock (par $1)       31,000     31,000                 0            0%

Retained Earnings              72,000    44,000        28,000         64%

Total liabilities & stockholders'

 Equity                            $210,000 $193,000      $17,000          8.8%

Thus, the horizontal analysis shows the trends in the accounts in the financial statements of Tiger Audio Inc. over some comparative time.

Learn more about the horizontal analysis at https://brainly.com/question/23638411

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