(Horizontal and Vertical Analysis) Presented below is the comparative balance sh

Question

(Horizontal and Vertical Analysis) Presented below is the comparative balance sheet for Gilmour Company

Instructions
(Round to two decimal places.)
(a) Prepare a comparative balance sheet of Gilmour Company showing the percent each item is of the
total assets or total liabilities and stockholders’ equity.
(b) Prepare a comparative balance sheet of Gilmour Company showing the dollar change and the
percent change for each item.
(c) Of what value is the additional information provided in part (a)?
(d) Of what value is the additional information provided in part (b)?

GILMOUR COMPANY COMPARATIVE BALANCE SHEET As oF DECEMBER 31, 2015 AND 2014 December 31 2015 2014 Assets Cash Accounts receivable (net) Short-term investments Inventories Prepaid expenses Plant & equipment Accumulated depreciation $ 180,000 220,000 270,000 1,060,000 25,000 2,585,000 (1,000,000) $3,340,000 275,000 155,000 150,000 980,000 25,000 1,950,000 (750,000) $2,785,000 Liabilities and Stockholders' Equity Accounts payable Accrued expenses Bonds payable Capital stock Retained earnings $50,000 170,000 450,000 2,100,000 570,000 $3,340,000 $ 75,000 200,000 190,000 1,770,000 550,000 $2,785,000

Explanation / Answer

Answer GILMOUR COMPANY Comparative Balance Sheet As of December 31,2014 and 2015 Assets 2015 % 2014 % Change in $ Change in % In $ In $ Cash 180000 5.39% 275000 9.87% -95000 -4.49% Account Receivables (Net) 220000 6.59% 155000 5.57% 65000 1.02% Short Term Investments 270000 8.08% 150000 5.39% 120000 2.70% Inventories 1060000 31.74% 980000 35.19% 80000 -3.45% Prepaid Expenses 25000 0.75% 25000 0.90% 0 -0.15% Plant & Equipment 2585000 77.40% 1950000 70.02% 635000 7.38% Accumulated Depreciation -1000000 -29.94% -750000 -26.93% -250000 -3.01% Total 3340000 100.00% 2785000 100.00% 555000 Liabilities & Stockholders Equity Accounts Payable 50000 1.50% 75000 2.69% -25000 -1.20% Accrued Expenses 170000 5.09% 200000 7.18% -30000 -2.09% Bonds Payable 450000 13.47% 190000 6.82% 260000 6.65% Capital Stock 2100000 62.87% 1770000 63.55% 330000 -0.68% Retained Earnings 570000 17.07% 550000 19.75% 20000 -2.68% Total 3340000 100.00% 2785000 100.00% 555000

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