Question

2017 2016 (a) Accounts receivable $ 175,000 $ 140,000 (b) Retained earnings 30,000 (14,000 ) (c) Sales revenue 855,000 750,000 (d) Operating expenses 170,000 200,000 (e) Income taxes payable 11,000 10,000 Using horizontal analysis, show the percentage change from 2016 to 2017 with 2016 as the base year

Answer 1

Percentage Change = (Amount in 2017 - Amount in 2016) / Amount in 2016

a. Accounts Receivable

= (175,000 - 140,000) /140,000

= 25%

b. Retained earnings

= (30,000 - (-14,000)) / 14,000

= 314%

c. Sales revenue

= (855,000 - 750,000) / 750,000

= 14%

d. Operating expenses

= (170,000 - 200,000) / 200,000

= -15%

e. Income taxes payable

= (11,000 - 10,000) / 10,000

= 10%