Question

Gingerbread Inc. reported the following selected financial information for 2019: Net Sales $850,000 Gross Profit 450,000 Net Income 200,000 Total Assets 1,875,000 Accounts Payable 245,000 Total Liabilities 1,200,000 If Gingerbread were preparing a vertical analysis, what percentage would be reported for Accounts Payable on the Balance Sheet?

Answer 1

Answer:

Accounts payable would be 20.42% of the balance sheet , when preparing a vertical analysis.

Explanation:

In the question it is told that Ginger bread is doing a vertical analysis, where when we have to calculate the percentage of certain item of the balance sheet , we will use formula -

 ( Balance sheet item / Total liability ) x 100

Given information - Accounts payable = $245,000

                                Total liabilities = $1200,000

Putting these values in formula -

= $245,000 / $1200,000   X 100

= .20416 X 100

= 20.416

= 20.42% ( APPROXIMATELY )