Question

Richardson Company has a condensed income statement as shown.

Year 2 Year 1
$150,000
133,000
$17,000
Sales
$165,500
Total operating expenses
147,500
Net income
$18,000
Using horizontal analysis, calculate the amount and percent change for sales. Round percentage to one decimal pl
a. $(15,500). (9.4) %
O b. $15.500, 10.3%
Oc. $15.500, 19.6%
O d. $(15.500). (10.3)%

Answer 1

Explanation:

To calculate the amount and percent change for sales using horizontal analysis, you can use the following formula:

Amount Change = Year 2 Sales - Year 1 Sales

Percent Change = (Amount Change / Year 1 Sales) * 100

Given the information provided:

Year 2 Sales = $150,000

Year 1 Sales = $165,500

Amount Change = $150,000 - $165,500 = -$15,500 (Note: The negative sign indicates a decrease in sales from Year 1 to Year 2.)

Now, calculate the percent change:

Percent Change = (-$15,500 / $165,500) * 100 ≈ -9.4%

So, the correct answer is option A:

a. $(15,500). (9.4)%