Question 4:

Comparative information taken from the Wells Company financial statements is shown below:

2009 2008

(a) Notes receivable 20,000 15000

(b) Accounts receivable 182,000 140,000

(c) Retained earnings 30,000 20,000

(d) Income taxes payable 44,000 20,000

(e) Sales 960,000 750,000

(f) Operating expenses 170,000 200,000

Instructions:

1-Using horizontal analysis, show the percentage change from 2008 to 2009 with 2008 as the base year. (3 marks)

2- Interpret the result that you find for sales and operating expenses. (0.5*2 = 1 mark)