FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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horizontal analysis
### Horizontal Analysis of Gross Sales **Objective:** Perform a horizontal analysis for the entry "Gross Sales" shown on the income statement portion below. Round percentages to one decimal place. #### Income Statement Analysis | Revenue | 2019 | 2018 | Increase/Decrease | Percent | |---------------------------------|-----------|-----------|-------------------|---------| | **Gross Sales** | $277,000 | $200,500 | | | | Less: Sales Returns and Allowances | 14,200 | 12,400 | | | | **Net Sales** | 262,800 | 188,100 | | | | **Cost of Goods Sold** | | | | | | Merchandise Inventory | 31,900 | 38,800 | | | | Net Purchases | 60,300 | 55,500 | | | | Goods Available for Sale | 92,200 | 89,300 | | | | Less: Merchandise Inventory (Dec. 31) | 48,000 | 60,200 | | | | **Cost of Goods Sold** | 49,200 | 29,100 | | | | **Gross Margin** | 213,600 | 159,000 | | | #### Explanation of Analysis Table: - **Revenue:** - **Gross Sales:** Represents total sales before deductions for returns and allowances. - **Net Sales:** Calculated by subtracting Sales Returns and Allowances from Gross Sales. - **Cost of Goods Sold:** - **Merchandise Inventory (Opening):** Inventory at the beginning of the period. - **Net Purchases:** Total purchases minus any returns or allowances. - **Goods Available for Sale:** Sum of Merchandise Inventory and Net Purchases. - **Merchandise Inventory (Closing):** Inventory at the end of the period. - **Cost of Goods Sold (COGS):** Calculated by subtracting the closing inventory from Goods Available for Sale. - **Gross Margin:** Net Sales minus Cost of Goods Sold, representing the profit made before deducting operating expenses. ### Graphs/Diagrams: The dataset does not include any graphs or diagrams. However, for educational purposes
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Transcribed Image Text:### Horizontal Analysis of Gross Sales **Objective:** Perform a horizontal analysis for the entry "Gross Sales" shown on the income statement portion below. Round percentages to one decimal place. #### Income Statement Analysis | Revenue | 2019 | 2018 | Increase/Decrease | Percent | |---------------------------------|-----------|-----------|-------------------|---------| | **Gross Sales** | $277,000 | $200,500 | | | | Less: Sales Returns and Allowances | 14,200 | 12,400 | | | | **Net Sales** | 262,800 | 188,100 | | | | **Cost of Goods Sold** | | | | | | Merchandise Inventory | 31,900 | 38,800 | | | | Net Purchases | 60,300 | 55,500 | | | | Goods Available for Sale | 92,200 | 89,300 | | | | Less: Merchandise Inventory (Dec. 31) | 48,000 | 60,200 | | | | **Cost of Goods Sold** | 49,200 | 29,100 | | | | **Gross Margin** | 213,600 | 159,000 | | | #### Explanation of Analysis Table: - **Revenue:** - **Gross Sales:** Represents total sales before deductions for returns and allowances. - **Net Sales:** Calculated by subtracting Sales Returns and Allowances from Gross Sales. - **Cost of Goods Sold:** - **Merchandise Inventory (Opening):** Inventory at the beginning of the period. - **Net Purchases:** Total purchases minus any returns or allowances. - **Goods Available for Sale:** Sum of Merchandise Inventory and Net Purchases. - **Merchandise Inventory (Closing):** Inventory at the end of the period. - **Cost of Goods Sold (COGS):** Calculated by subtracting the closing inventory from Goods Available for Sale. - **Gross Margin:** Net Sales minus Cost of Goods Sold, representing the profit made before deducting operating expenses. ### Graphs/Diagrams: The dataset does not include any graphs or diagrams. However, for educational purposes
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