Q4SE - Horngren'S Financial And Managerial Accounting

Question

Great Value Optical Company reported the following amounts on its balance sheet at

December 31, 2018 and 2017:

2018 2017

Cash and Receivables \( 80,640 \) 80,575

Merchandise Inventory 56,840 54,450

Property, Plant, and Equipment, Net 142,520 139,975

Total Assets \( 280,000 \) 275,000

Prepare a vertical analysis of Great Value’s assets for 2018 and 2017.

Step-by-Step Solution

Answer

Answer

Cash and Cash Receivables decrease and Inventory Increases but Property plant and equipment remain constant.

Step1: Balance Sheet (Partial)

Great Value Optical Company
Balance Sheet (Partial)
December 31, 2018 and 2017
	2018		2017
	Amount	Percent of Total	Amount	Percent of Total
December 31, 2018 and 2017	80,640	28.8%	80,575	29.3%
Merchandise Inventory	56,840	20.3%	54,450	19.8%
Property, Plant and equipment, net	142,520	50.9%	139,97	50.9%
Total Assets	280,000	100.0%	275,000	100%

Step 2: Workings

Great Value Optical Company
Balance Sheet (Partial)
December 31, 2018 and 2017
	2018		2017
	Amount	Percent of Total	Amount	Percent of Total
Cash and Receivables(a)	80,640	(a/d)	(a/d)	(a/d)
Merchandise Inventory(b)	(a/d)	(b/d)	(b/d)	(b/d)
Property, Plant and equipment, net(C)	(b/d)	(c/d)	(c/d)	(c/d)
Total Assets(d)	280,000	(d/d)	(d/d)	(d/d)