Horizontal analysis (Learning Objective 2) 15–20 min.

Below is the comparative income statement of Wellington Supply, Inc.

Wellington Supply, Inc.

Comparative Income Statement Years Ended December 31, 2014 and 2013 Revenue Expenses:

Cost of Goods Sold Selling and General Expenses Interest Expense Income Tax Expense Total Expenses Net Income

$470,700 204,900 95,600 48,100 21,900 370,500

$100,200 2013

$515,200 223,800 96,400 51,600 26,500 398,300

$116,900 2014 Requirements 1. Prepare a horizontal analysis of the comparative income statement of Wellington Supply, Inc. Round percentage changes to the nearest tenth of a percent.

2. Why did net income increase by a higher percent than total revenues increased during 2014?

AppendixLO1