Comprehensive Problem 2 - St of Cash Flows and Ratios Algo R. Allen Inc. R. Allen Inc. Income Statement Comparative Balance Sheets For years ended December 31, 2017 and 2018 December 31, 2018 and 2017 2018 2017 Change 2018 2017 Current assets: Sales (all on credit) $528,000 $475,000 Cash $50,270 $31,700 $18,570 Cost of goods sold o Accounts receivable (321,000) (263,000) 38,000 32,000 6,000 (net) Gross margin 207,000 212,000 Inventory 44,000 42,000 2,000 Prepaid expenses 1,200 2,700 -1,500 Depreciation 37,000 51,000 Other current assets 1.700 2.600 -900 expense Other operating 114,000 95,000 Total current assets 135,170 111,000 24,170 expenses Total operating 151,000 146,000 expenses Operating income 56,000 66,000 Long-term Investments 81,000 56,000 25,000 Plant assets 307,000 257,000 50,000 (4,700) (3,500) Less: accumulated (77,800) Other income (expenses) Interest expense Gain on sale of investments Loss on sale of plant assets Total other income (expenses) 229,200 (51,000) 26,800 206,000 23,200 373,000 72,370 445,370 depreciation 5,500 3,900 Total plant assets (2,700) (3,200) Total assets (12,900) (2,800) Current liabilities: 54,100 63,200 Accounts payable $25,500 Income before income taxes Income taxes expense Net income (16,230) (18,960) $37,870 $44,240 Accrued liabilities Income taxes payable Total current liabilities 3,600 1,400 30,500 $26,000 $-500 3,000 600 5,000 3,600 34,000 3,500 175,000 61,000 209,000 57,500 R. Allen Inc. Long term liabilities: Statement of Retained Earnings Notes Payable 236,000 For the year ended December 31, 2018 Total liabilities 266,500 2018 2017 Ret. earnings, Jan. 1 $26,000 $0 Stockholders' equity 37,870 Add: net income Common stock, $5 par 44,240 110.000 value Deduct: Dividends (23,000). (18,240) Additional paid-in capital 28,000 Increase in retained 14,870 26,000 Retained earnings 40,870 earnings Ret. earnings, Dec. $40,870 $26,000 Total stockholders' equity 178,870 31 Total liabilities and $445.370 stockholders' equity 110,000 28,000 26,000 164,000 0 14,870 14,870 $373,000 $72,370 22,000 22,000 Other information: Shares of common stock outstanding Earnings per share Dividends per share Market price per share, common stock $14 $12 Cash Flows Horiz Analysis Horiz Vertic Analysis Analysis Vertic Analysis Ratios Requirement Prepare a vertical analysis on the partial income statements for 2017 and 2018. Show less % R. Allen Inc. Partial Income Statement (Vertical analysis) For the years ended December 31, 2018 and 2017 2018 % 2017 Sales $ 475,000 Cost of goods sold Gross margin Expenses Depreciation expense Other operating expenses Total operating expenses Operating income