Income statements for Rundle Company for Year 3 and Year 4 follow:

RUNDLE COMPANY Income Statements
	Year 4				Year 3
Sales	$	201,000			$	181,000
Cost of goods sold		143,300				121,300
Selling expenses		20,600				18,600
Administrative expenses		12,200				14,200
Interest expense		3,100				5,100
Total expenses	$	179,200			$	159,200
Income before taxes		21,800				21,800
Income taxes expense		5,400				3,500
Net income	$	16,400			$	18,300

Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year.

b.

RUNDLE COMPANY
Vertical Analysis of Income Statements
	Percentage of Sales Year 4		Percentage of Sales Year 3
Sales		%		%
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
Income before taxes
Income taxes expense
Net income		%		%

• a.

RUNDLE COMPANY
Horizontal Analysis of Income Statements
	Percentage Change over Year 3
Sales		%
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
Total expenses
Income before taxes
Income taxes expense
Net income (loss)		%