Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter 2, Problem 2.2MAD
a.
To determine
Horizontal analysis of income statement:
In horizontal analysis of income statement, the amount of each item of the current year financial statement is compared with the previous year financial statement. The amount of each item increased or decreased in the current income statement, and its respective percentage can be computed by taking the earlier statement as the base.
To prepare: A horizontal analysis of income statements.
b.
To determine
To interpret: The results of the horizontal analysis.
c.
To determine
To find: The reason to decrease Incorporation C’s revenue and operating income in year 2.
Expert Solution & Answer
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Students have asked these similar questions
Revenues:
Food and beverage
Delivery service
Total revenues
Restaurant operating costs:
Chipotle Mexican Grill, Inc.
Operating Income
For the Years Ended December 31
(in thousands)
Year 2
Amount
Year 2
Year 1
Percent
Amount
Year 1
Percent
$7,457
100 %
$5,921
100 %
90
%
64
%
$7,547
100 %
$5,985
100 %
Food, beverage, packing
$(2,309)
%
$(1,933)
906
%
Labor
(1,918)
90
%
(1,593)
%
Occupancy (rent)
(416)
%
(388)
%
%
Marketing, utilities, other
(1,197)
%
(1,030)
General and administrative
(607)
%
(466)
%
Depreciation
(255)
%
(238)
%
%
Miscellaneous expenses
(40)
%
(47)
%
Total operating expenses
$(6,742)
$(5,695)
%
%
%
$290
$805
Operating income
h. Based on the calculations above, which of the following statements are correct?
Total operating expenses
Operating income
Required:
$(6,742)
$(5,695)
$805
$290
a. Prepare a vertical analysis of the operating income for the two years. Round percentages to one decimal place.
Chipotle Mexican Grill, Inc.
Operating Income.
For the Years Ended December 31
(in thousands)
Year 2
Amount
Year 2
Year 1
Year 1
Percent
Amount
Percent
Revenues:
Food and beverage
$7,457
%
$5,921
%
Delivery service
90
%
64
%
Total revenues
$7,547
%
$5,985
%
Restaurant operating costs:
Food, beverage, packing
$(2,309)
%
$(1,933)
Labor
(1,918)
%
(1,593)
%
Occupancy (rent)
(416)
%
(388)
0/a
Marketing, utilities, other
(1,197)
%
(1,030)
%
General and administrative
(607)
%
(466)
%
Depreciation
(255)
%
(238)
9
Miscellaneous expenses
(40)
%
(47)
%
Total operating expenses
$(6,742)
%
$(5,695)
%
Operating income
$805
%
$290
%
b. Based on the calculations above, which of the following statements are correct?
1. Operating income as a percent of revenues increased from Year 1 to Year 2.
2. All operating…
Multiple-Step Income Statement
The following information is available for Bergin Pastry Shop for the year ended December 31.
Gross margin
$34,600
Income from operations
9,200
Income taxes expense (14% of income before taxes)
?
Interest expense
1,800
Net sales
85,800
Required:
Prepare a multiple-step income statement for Bergin for the year ended December 31.
Chapter 2 Solutions
Corporate Financial Accounting
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Ch. 2 - Rules of debit and credit and normal balances...Ch. 2 - Journal entry for asset purchase Prepare a journal...Ch. 2 - Journal entry for fees earned Prepare a journal...Ch. 2 - Journal entry for dividends Prepare a journal...Ch. 2 - Missing amount from an account On August 1, the...Ch. 2 - Trial balance errors For each of the following...Ch. 2 - Correcting entries The following errors took place...Ch. 2 - Horizontal analysis Two income statements for...Ch. 2 - Prob. 2.1EXCh. 2 - Chart of accounts Innerscape Interiors is owned...Ch. 2 - Chart of accounts LeadCo School is a newly...Ch. 2 - Rules of debit and credit The following table...Ch. 2 - Normal entries for accounts During the month,...Ch. 2 - Normal balances of accounts Identify each of the...Ch. 2 - Transactions Innovative Consulting Co. has the...Ch. 2 - Journalizing and posting On February 11, 20Y9,...Ch. 2 - Transactions and T accounts The following selected...Ch. 2 - Cash account balance During the month, Bavarian...Ch. 2 - Account balances A. During February, 186,500 was...Ch. 2 - Retained earnings account balance As of January 1,...Ch. 2 - Identifying transactions Rocky Mountain Tours Co....Ch. 2 - Journal entries Based upon the T accounts in...Ch. 2 - Trial balance Based upon the data presented in...Ch. 2 - Trial balance The accounts in the ledger of...Ch. 2 - Effect of errors on trial balance Indicate which...Ch. 2 - Total of Credit column: 525,000 Error in triad...Ch. 2 - Effect of errors on trial balance The following...Ch. 2 - Errors in trial balance Identify the errors in the...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries into T accounts and trial balance Marjorie...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance On November...Ch. 2 - Journal entries and trial balance Elite Realty...Ch. 2 - Corrected trial balance The Lexington Group has...Ch. 2 - Entries into T accounts and trial balance Ken...Ch. 2 - Journal entries and trial balance On August 1,...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance Valley Realty...Ch. 2 - Corrected trial balance Tech Support Services has...Ch. 2 - Continuing Problem 4.Total of Debit column: 40,750...Ch. 2 - Analyze Amazon.com Amazon.com, Inc. (AMZN) is the...Ch. 2 - Prob. 2.2MADCh. 2 - Analyze Vera Bradley. Inc. Vera Bradley, Inc....Ch. 2 - Analyze Target The following data (in millions)...Ch. 2 - Prob. 2.5MADCh. 2 - Prob. 2.6MADCh. 2 - Prob. 2.1TIFCh. 2 - Prob. 2.4TIFCh. 2 - Record transactions The following discussion took...
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