Question

Bloom's Garden Center Company Selected data from the financial statements of Bloom's Garden Center are provided below. 2012 2011 Accounts receivable $ 70,000 $ 56,000 Inventory 15,000 20,000 Total assets 450,000 380,000 Net sales 400,000 300,000 Cost of goods sold 200,000 180,000 Refer to the selected data provided for Bloom's Garden Center. Which of the following would result from a horizontal analysis of Bloom's balance sheet?a. Accounts receivable increased $14,000 or 25% during 2012.

b. The accounts receivable turnover ratio is 6.35 times in 2012.
c. Accounts receivable is around five times larger than inventory in 2012.
d. Accounts receivable is 15.6% of total assets in 2012.

Answer 1

a. Accounts receivable increased $14,000 or 25% during 2012.

Step-by-step explanation:

The horizontal analysis of Bloom's will compare each account with the same account of a base previous year.

The 2012 accounts receivables will be compared with the 2011 accounts receivable.

The nominal increase: 70,000 - 56,000 = 14,000

The percent increase: 14,000/56,000 = 0.25

So the account receivable increases by 14,000 which is 25% of the 011 of the 2011 AR