Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation:

WATERLOO CORPORATION

Comparative Balance Sheets

December 31,20X5 and 20X4

20X5 20X4

Assets

Current Assets

Cash $ 21,500 $ 27,700

Accounts Receivable (net) 41,500 37,700

Inventories 6,750 6,450

Prepaid Expense 75,000 78,950

Total Current Assets $ 105,750 $ 103,950

Property, Plant, and Equipment

Buildings (net) $ 31,500 $ 32,700

Equipment (net) 35,00042,000

Vehicles (net) 166,250 173,950

Total Property, Plant, and Equipment $ 17,50 $ 5,200

Trademarks (net) $ 253,000 $ 252,700

Total assets $ 52,000 $ 72,700

Liabilities and Stockholders' Equity

Current Liabilities

Accounts Payable $ 16,500 $ 42,700

Notes Payable 5,500 27,700

Federal Taxes Payable 68,000 137,700

Total Current Liabilities $ 53,000 $ 27,700

Long-Term Debt $ 118,000 $ 162,700

Total Liabilities $ 28,000 $ 27,700

Stockholders' Equity

Common Stock, $10 par $ 113,000 $ 67,700

Retained Earnings 138,000 92,700

Total Stockholders' Equity $ 253,000 $ 252,700

Total Liabilities and Stockholders' Equity $ 258,000 $ 258,000

WATERLOO CORPORATION

Comparative Income Statements

For the Years Ending December 31, 20X5 and 20X4

Net Sales $ 585,000 $521,000

Cost of Goods Sold 330,000 250,000

Gross Profit $ 220,000 $250,000

Operating Expense 132,500 100,000

Income Before Interest and Taxes $ 87,500 $150,000

Interest Expense 12,500 3,000

Income Before Taxes $ 75,000 $147,000

Income Tax Expense 30,000 58,800

Net Income $ 45,000 $ 88,200

Instructions

a. Prepare a horizontal analysis of the balance sheet, showing dollar and percentage changes. Round all calculations in parts (a) and (b) to two decimal places.

b. Prepare a vertical analysis of the income statement by relating each item to net sales.

c. Briefly comment on the results of your analysis.

Prepare a horizontal analysis of the balance sheet showing percentage changes from 20X4 to 20X5. Round all calculations in parts (a) and (b) to two decimal places.

Questions

YOUR ANSWERS BASED UPON COURSE START DATE

WATERLOO CORPORATION

Comparative Balance Sheets

December 31,20X5 and 20X4

Assets

Current Assets

% Change

Cash

Accounts Receivable (net)

Inventories

Prepaid Expense

Total Current Assets

Buildings (net)

Equipment (net)

Vehicles (net)

Total Property, Plant, and Equipment

Trademarks (net)

Total assets

Accounts Payable

Notes Payable

Federal Taxes Payable

Total Current Liabilities

Long-Term Debt

Total Liabilities

Common Stock, $10 par

Retained Earnings

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

WATERLOO CORPORATION

Comparative Income Statements

Prepare a vertical analysis of the 20X5 income statement by relating each item to net sales.

20X5

Net Sales

Cost of Goods Sold

Gross Profit

Operating Expense

Income Before Interest and Taxes

Interest Expense

Income Before Taxes

Income Tax Expense

Net Income

Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation: WATERLOO CORPORATION Comparative Balance Sheets December 31,20X5 and 20X4 Assets Current Assets Cash Accounts Receivable (net) Inventories Prepaid Expense Total Current Assets Property, Plant, and Equipment Buildings (net) Equipment (net) Vehicles (net) Total Property, Plant, and Equipment Trademarks (net) Total assets Liabilities and Stockholders' Equity Current Liabilities Accounts Payable Notes Payable Federal Taxes Payable Total Current Liabilities Long-Term Debt Total Liabilities Stockholders' Equity Common Stock, $10 par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 20X5 20X4 $ 21,500 41,500 6,750 75,000 $ 105,750 $ 27,700 37,700 6,450 78,950 $ 103,950 $ 31,500 $ 32,700 35,000 42,000 166,250 173,950 $ 17,50 $ 5,200 $ 253,000 $ 252,700 $ 52,000 $ 72,700 $ 16,500 $ 42,700 5,500 27,700 68,000 137,700 $ 53,000 $ 27,700 $ 118,000 $ 162,700 $ 28,000 $ 27,700 $ 113,000 138,000 $ 253,000 $ 258,000 $ 67,700 92,700 $ 252,700 $ 258,000 WATERLOO CORPORATION Comparative Income Statements For the Years Ending December 31, 20X5 and 20X4 Net Sales Cost of Goods Sold Gross Profit Operating Expense Income Before Interest and Taxes Interest Expense Income Before Taxes Income Tax Expense Net Income $ 585,000 330,000 $ 220,000 132,500 $ 87,500 12,500 $ 75,000 30,000 $ 45,000 $521,000 250,000 $250,000 100,000 $150,000 3,000 $147,000 58,800 $ 88,200 Instructions a. Prepare a horizontal analysis of the balance sheet, showing dollar and percentage changes. Round all calculations in parts (a) and (b) to two decimal places. b. Prepare a vertical analysis of the income statement by relating each item to net sales. c. Briefly comment on the results of your analysis. Prepare a horizontal analysis of the balance sheet showing percentage changes from 20X4 to 20X5. Round all calculations in parts (a) and (b) to two decimal places. Questions YOUR ANSWERS BASED UPON COURSE START DATE WATERLOO CORPORATION Comparative Balance Sheets December 31,20X5 and 20X4 Assets Current Assets Cash Accounts Receivable (net) Inventories Prepaid Expense Total Current Assets Buildings (net) Equipment (net) Vehicles (net) Total Property, Plant, and Equipment Trademarks (net) Total assets Accounts Payable Notes Payable Federal Taxes Payable Total Current Liabilities Long-Term Debt Total Liabilities Common Stock, $10 par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity WATERLOO CORPORATION % Change Comparative Income Statements Prepare a vertical analysis of the 20X5 income statement by relating each item to net sales. Net Sales Cost of Goods Sold Gross Profit Operating Expense Income Before Interest and Taxes Interest Expense Income Before Taxes Income Tax Expense Net Income 20X5