Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
14th Edition
ISBN: 9781337804011
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 2, Problem 1ADM
(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 the operating income statements.
(b)
To determine
To interpret: The results of the horizontal analysis.
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Vertical analysis
Amazon.com, Inc. is the largest Internet retailer in the United States. Amazon’s income statements through income from operations for two recent years are as follows (in millions):
Amazon.com, Inc.
Operating Income Statements
For the Years Ended December 31
(in millions)
Year 2
Year 1
Product sales
$70,080
$60,903
Service sales
18,908
13,549
Total sales
$88,988
$74,452
Cost of sales
$62,752
$54,181
Fulfillment
10,766
8,585
Marketing
4,332
3,133
Technology and content
9,275
6,565
General and administrative
1,552
1,129
Other operating expense (income), net
133
114
Total operating expenses
$88,810
$73,707
Income from operations
$178
$745
Required:
a. Prepare a vertical analysis of the two operating income statements. Round percentages to one decimal place.
Vertical analysis
Amazon.com, Inc.is the largest Internet retailer in the United States. Amazon's income statements through income from operations for two recent years are as follows (in mH!ions):
Amazon.com,Inc.
Operating Income Statements
For the Years Ended December 31 (in millions)
Year 2
Year 1
Product sales
$70,080
$60,903
Service sales
18,908
13,549
Total sales
$88,988
$74,452
Cost of sales
$62,752
$54,181
Fulfillment
10,766
8,585
Marketing
4,332
3,133
Technology and content
9,275
6,565
General and administrative
1,552
1,129
Other operating expense (income), net
133
114
Total operating expenses
$88,810
$73,707
Income from operations
$ 178
$ 745
1.Prepare a vertical analysis of the two operating income statements.Round percentages to one decimal pl
2.Use the vertical analysis to explain the decrease in income from operations.
Analyze and compare Amazon.com, Best Buy, and Walmart
The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Best Buy Co., Inc. (BBY), and Walmart Inc. (WMT) for a recent fiscal year follow (in millions):
Line Item Description
Amazon
Best Buy
Walmart
Sales
$280,522
$43,638
$523,964
Cost of sales
(165,536)
(33,590)
(394,605)
Gross profit
$114,986
$10,048
$129,359
Selling, general, and administrative expenses
(100,244)
(7,998)
(108,791)
Operating expenses
(201)
(41)
0
Operating income
$14,541
$2,009
$20,568
Question Content Area
1. Prepare comparative common-sized income statements for each company. Round percentages to one decimal place. If percentages is zero, enter "0". For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
Comparative Income statements
Line Item Description
Amazon
Best Buy
Walmart
Sales
Sales%
Sales%
Sales%
Cost of sales
Cost of sales%
Cost of…
Chapter 2 Solutions
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
Ch. 2 - What is the difference between an account and a...Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - eCatalog Services Company performed services in...Ch. 2 - If the two totals of a trial balance are equal,...Ch. 2 - Assume that a trial balance is prepared with an...Ch. 2 - Prob. 7DQCh. 2 - Assume that Muscular Consulting erroneously...Ch. 2 - Assume that Sunshine Realty Co. borrowed 300,000...Ch. 2 - Checking accounts are one of the most common forms...
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 - 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 Zenith Consulting Co. has the...Ch. 2 - Journalizing and posting On October 3, 2018, Regal...Ch. 2 - Transactions and T accounts The following selected...Ch. 2 - Cash account balance During the month, Warwick Co....Ch. 2 - Account balances A. During February, 186,500 was...Ch. 2 - Retained earnings account balance As of January 1,...Ch. 2 - Identifying transactions Napa Tours Co. is a...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 - Errors in trial balance The following preliminary...Ch. 2 - Effect of errors on trial balance The following...Ch. 2 - Prob. 2.20EXCh. 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 1,...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 - The transactions completed by PS Music during June...Ch. 2 - Prob. 1ADMCh. 2 - Prob. 2ADMCh. 2 - Target: Horizontal analysis The following data (in...Ch. 2 - Prob. 4ADMCh. 2 - Prob. 2.1TIF
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