Horizontal and Vertical Analysis

Horizontal and Vertical Analysis

Sanborn Corporation’s condensed comparative income statements for 20×8 and 20×7 appear below. The corporation’s condensed comparative balance sheets for 20×8 and 20×7 appear on the next page.

Required

1. Prepare schedules showing the amount and percentage changes from 20×7 to 20×8 for the comparative income statements and the balance sheets.

2. Prepare common-size income statements and balance sheets for 20×7 and 20×8.

3. User Insight: Comment on the results in requirements 1 and 2 by identifying favorable and unfavorable changes in the components and composition of the statements.