Perform a horizontal analysis for the balance sheet entry "Cash" given below. That is, find the amount of increase or decrease and the associated percent (rounded to the nearest tenth). Increase/Decrease Assets 2019 2018 Amount Percent Current Assets Cash $18,800 $12,900 ??? ??? Accounts Receivable 22,300 18,100 Merchandise Inventory 30,100 25,900 Supplies 5,600 7,600 Total Current Assets 76,800 64,500 Property, Plant, and Equipment Machinery and Equipment 56,000 57,100 Total Assets $132,800 $121,600 Step 1 In horizontal analysis, each item of the current period is compared in dollars and percent with the corresponding item from a previous period. First, the dollar difference between the most recent and previous periods will be found and entered in the Amount column for each entry. If the amount is a decrease, it is entered in parentheses. A horizontal analysis is to be done on the "Cash" entry of the balance sheet below. Since a comparison of the "Cash" entry will be made from the previous period, subtract the amount of the "Cash" entry in 2018 from 2019 and place the difference in the balance sheet. Assets 2019 2018 Increase/Decrease Amount Current Assets Cash $18,800 $12,900 18,800 − 12,900 = Accounts Receivable 22,300 18,100 Merchandise Inventory 30,100 25,900 Supplies 5,600 7,600 Total Current Assets 76,800 64,500 Property, Plant, and Equipment Machinery and Equipment 56,000 57,100 Total Assets $132,800 $121,600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Perform a horizontal analysis for the balance sheet entry "Cash" given below. That is, find the amount of increase or decrease and the associated percent (rounded to the nearest tenth).

Assets	2019	2018	Amount	Percent
			Increase/Decrease
Current Assets
Cash	$18,800	$12,900	???	???
Accounts Receivable	22,300	18,100
Merchandise Inventory	30,100	25,900
Supplies	5,600	7,600
Total Current Assets	76,800	64,500
Property, Plant, and Equipment
Machinery and Equipment	56,000	57,100
Total Assets	$132,800	$121,600

Step 1

In horizontal analysis, each item of the current period is compared in dollars and percent with the corresponding item from a previous period. First, the dollar difference between the most recent and previous periods will be found and entered in the Amount column for each entry. If the amount is a decrease, it is entered in parentheses.

A horizontal analysis is to be done on the "Cash" entry of the balance sheet below. Since a comparison of the "Cash" entry will be made from the previous period, subtract the amount of the "Cash" entry in 2018 from 2019 and place the difference in the balance sheet.

Assets	2019	2018	Increase/Decrease Amount
Current Assets
Cash	$18,800	$12,900	18,800 − 12,900 =
Accounts Receivable	22,300	18,100
Merchandise Inventory	30,100	25,900
Supplies	5,600	7,600
Total Current Assets	76,800	64,500
Property, Plant, and Equipment
Machinery and Equipment	56,000	57,100
Total Assets	$132,800	$121,600

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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