Level Six Corporate Accounting and Financial Analysis 3 Parts

You and your friend Greg Kommens decide that you can benefit from joining your bakery with his cinnamon roll shop. In the first two parts of this problem, you need to answer some questions about joining forces to create a new business. In the third part of the problem, you will need to prepare financial information following the first year of operations of your new business.

Part A.

Greg has operated his shop for 2 years. He buys coffee from a local supplier and bakes the cinnamon rolls in-house. Your business consists of catering events and selling fine mixers. The plan is for you to use the premises Greg currently rents to give you an opportunity to display your cakes and demonstrate the mixers that you sell. You will also hire, train, and supervise staff to bake cookies and muffins sold in the shop. By offering a greater variety of baked goods, both of you would benefit. Another advantage is that the coffee shop will have one central location for selling the mixers. However, you want to have a better understanding of his growth, so you ask to see is balance sheets for the past two years.

His comparative balance sheets are as follows:

Greg's Cinnamon Rolls
Condensed Balance Sheet
31-Oct
		2021		2020
Assets
Current Assets		$10,360		$8,602
Property, plant, and equipment (net)		2,500		2,256
Other assets		1,480		1,782
Total assets		$14,340		$12,640
Liabilities and Stockholders' Equity
Current Liabilities		$3,290		$3,390
Long-term liabilities		1,470		1,300
Stockholders equity		9,580		7,950
Total liabilities and stockholders' equity		$14,340		$12,640

Required part A

1. Prepare a horizontal analysis of the balance sheet data for Greg's' Cinnamon Rolls, using 2020 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)
2. Prepare a vertical analysis of the balance sheet data for Greg's' Cinnamon Rolls for 2021