Problem 6. (10 points) The following is a summary of information presented on the financial statements of the Cake Company on December 31, 2007. 2005 Account Current assets Accounts receivable Merchandise inventory Current liabilities Long-term liabilities Common stock (2007: 5,000 shares 2006 4,000 shares) Retained earnings 2007 565,000 80.000 50,000 75.000 30.000 50,000 $50,000 75.000 40,000 50,000 50.000 40,000 40.000 25.000 Net sales revenue Cost of goods sold Gross profit Selling and general expenses Net income before income tax expense Income tax expense Net income $525.000 400.000 125.000 45.000 80,000 24.000 $56.000 $500,000 395.000 105,000 50.000 55.000 16.500 $38.500 For Net Sales Revenue and Cost of Goods Sold, using horizontal analysis what would be reported? Problem 7. (10 points) Perform a vertical analysis for 2007 for the following income statement. Percent Account Net sales revenue Cost of goods sold Gross profit Selling and general expenses Net income before income tax Income tax expense Net income 2007 $557,000 400.000 157.000 70.000 87,000 24.000 $63.000 2006 $500,000 395.000 105,000 50.000 55.000 16.500 $38.500