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Basic Accounting Problem: Horizontal Analysis

See attached file for clarity.

Following is a comparative balance sheet for WorldView International Corporation:

WorldView International Corporation
Balance Sheet
December 31, 2008 and 2007
2008 2007
Current assets
Cash $ 10,000 $ 5,000
Short-term investment 7,000 10,000
Accounts receivable, net 30,000 23,000
Inventory 37,000 35,000
Prepaid expenses 4,000 3,000
Total current assets $ 88,000 $76,000

Property, plant, and equipment, net 33,300 35,000
Other assets 27,000 22,500
Total assets $148,300 $133,500

Current liabilities
Short-term borrowings $ 28,400 $ 13,900
Accounts payable 20,000 22,500
Total current liabilities $ 48,400 $ 36,400

Long-term debt 37,500 33,000
Total liabilities $ 85,900 $ 69,400

Stockholder's equity
Common stock, no par $ 20,000 $ 20,000
Retained earnings 42,400 44,100
Total stockholders' equity $ 62,400 $ 64,100
Total liabilities and stockholders' equity $148,300 $133,500

Required:
a. Calculate and show the percentages that would appear in a horizontal analysis for this balance sheet.
b. Indicate any positive and negative developments from one year to the next.

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Solution Summary

The solution discusses a basic accounting problem and provides a horizontal analysis.

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