Microsoft Word - acct 102 TEST fall 2020 Accounting 102 – Fall 2017 – Test A Page 1 /Accounting 102 – Test A For P1, P2, and P3 From the following information, compute the ratios indicated and place...

ACCOUNTING 102- TEST A
P1. Vertical analysis on the income statement and Balance sheet of Westwood Corporation for the year ended December 31, 20X7 &20X6 are shown below with formula and workings.
For Income statement, Vertical Analysis is done by taking each line item as a percentage of net sales.
For Balance Sheet, Vertical Analysis is done by taking each line item of assets as a percentage of total assets and each line item of liabilities as a percentage of total liabilities.
    VERTICAL ANALYSIS
    INCOME SHEET
     
    20X7 ($)
    20X6 ($)
     FORMULA
    20X7 in %
    20X6 in %
    Net sales
    1,60,000
    1,50,000
    (Net sales/Net sales) *100
    100.00%
    100.00%
    Cost of goods sold
    1,20,000
    1,18,000
    (Cost of goods sold/Net sales) *100
    75.00%
    78.67%
    Gross Margin
    40,000
    32,000
    (Gross Margin/Net sales) *100
    25.00%
    21.33%
    Operating Expenses
     
     
     
     
     
    Selling and Administrative Expenses
    16,000
    23,000
    (Selling and Admin.Expenses/Net sales) *100
    10.00%
    15.33%
    Interest Expenses
    8,000
    7,750
    (Interest Expenses/Net sales) *100
    5.00%
    5.17%
    Income tax Expenses
    4,000
    250
    (Income tax Expenses/Net sales) *100
    2.50%
    0.17%
    Net Income
    12,000
    1,000
    (Net Income/Net sales) *100
    7.50%
    0.67%
    VERTICAL ANALYSIS
    BALANCE SHEET
     
     
     
    FORMULA
     
     
     
    20X7 ($)
    20X6 ($)
     
    20X7 in %
    20X6 in %
    Assets
     
     
     
     
     
    Cash
    15,000
    17,000
    (Cash/total assets) *100
    7.50%
    8.42%
    Marketable Securities
    10,000
    10,000
    (Marketable Securities/total assets) *100
    5.00%
    4.95%
    Accounts Receivable (Net)
    20,000
    22,000
    (Accounts Receivable/total assets) *100
    10.00%
    10.89%
    Inventory
    30,000
    27,000
    (Inventories/total assets) *100
    15.00%
    13.37%
    Prepaid Expenses
    8,000
    9,000
    (Prepaid Expenses/total assets) *100
    4.00%
    4.46%
    Property, plant and equipment
    1,17,000
    1,17,000
    (Property, plant/total assets) *100
    58.50%
    57.92%
    Total assets
    2,00,000
    2,02,000
    (Total assets/total assets) *100
    100.00%
    100.00%
     
     
     
     
     
     
    Liabilities and Stockholder's Equity
     
     
     
     
     
    Current Liabilities
    30,000
    27,000
    (Current Liabilities/Total liabilities and equity) *100
    15.00%
    13.37%
    Long-term liabilities
    61,000
    56,000
    (Long-term liabilities/Total liabilities and equity) *100
    30.50%
    27.72%
    Stockholder's equity
    1,09,000
    1,19,000
    (Stockholder's equity/Total liabilities and equity) *100
    54.50%
    58.91%
    Total Liabilities and Stockholder's Equity
    2,00,000
    2,02,000
    (Total liabilities and equity/Total liabilities and equity)...