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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 14-1

Purpose: (L.O. 3, 4) This exercise will provide you with an example of horizontal and vertical analyses.

The comparative income statements of The McAllister Wealth Builder Corporation are shown below:

images

Instructions

Round all percentage computations to the nearest tenth of one percent.

(a) Prepare a horizontal analysis of the income statement data for The McAllister Wealth Builder Corporation using 2013 as a base. (Show the amount of increase or decrease and the percentage change.)

(b) Prepare a vertical analysis of the income statement data for The McAllister Wealth Builder Corporation in columnar form for both years.

(c) Briefly comment on the progress of the company as indicated by your comparative analyses.

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