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Collins and Wilson Company Financial Analysis

1. Condensed data taken from the ledger of Collins Company at December 31, 2006, and 2007, are as follows:

2007 2006

Current assets $ 200,000 $ 180,000

Property, plant and equipment 450,000 400,000

Intangible assets 20,700 30,000

Current liabilities 70,000 80,000

Long-term liabilities 200,000 250,000

Common Stock 275,000 200,000

Retained Earnings 125,700 80,000

Prepare a comparative balance sheet, with horizontal analysis, for December 31. 2006 and 2007. (Round percents to one decimal point.)

2. Revenue and expense data for Wilson Company are as follows:

2006 2005

Administrative expenses $ 24,750 $ 18,000

Cost of goods sold 487,500 375,000

Income Tax 15,000 12,000

Net sales 750,000 600,000

Selling expenses 182,500 154,800

(a) Prepare a comparative income statement, with vertical analysis, stating each item for both 2006 and 2005 as a percent of sales.

(b) Comment upon the significant changes disclosed by the comparative income statement.

Solution Summary

1. Condensed data taken from the ledger of Collins Company at December 31, 2006, and 2007, are as follows:

2007 2006

Current assets $ 200,000 $ 180,000

Property, plant and equipment 450,000 400,000

Intangible assets 20,700 30,000

Current liabilities 70,000 80,000

Long-term liabilities 200,000 250,000

Common Stock 275,000 200,000

Retained Earnings 125,700 80,000

Prepare a comparative balance sheet, with horizontal analysis, for December 31. 2006 and 2007. (Round percents to one decimal point.)

2. Revenue and expense data for Wilson Company are as follows:

2006 2005

Administrative expenses $ 24,750 $ 18,000

Cost of goods sold 487,500 375,000

Income Tax 15,000 12,000

Net sales 750,000 600,000

Selling expenses 182,500 154,800

(a) Prepare a comparative income statement, with vertical analysis, stating each item for both 2006 and 2005 as a percent of sales.

(b) Comment upon the significant changes disclosed by the comparative income statement.

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