Income statements for Walton Company for Year 3 and Year 4 follow: WALTON COMPANY Income Statements Year 4 Year 3 Sales $ 201,100 $ 181,100 Cost of goods sold 142,700 120,700 Selling expenses 20,700 18,700 Administrative expenses 12,300 14,300 Interest expense 3,800 5,800 Total expenses $ 179,500 $ 159,500 Income before taxes 21,600 21,600 Income taxes expense 5,600 3,600 Net income $ 16,000 $ 18,000 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. WALTON 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)