(Solved): Azua Corporation has the following balance sheet and income statement for 2020 and 2021. Based on t ...

Expert Answer

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the solution for Azua Corporation using the provided data. a) Comparative Income Statement Analysis: 2020: Revenue: $800 Cost of Sales: $2,400 Gross Profit: $800 - $2,400 = -$1,600 Selling Expenses: $80 Admin Expenses: $120 Operating Income: (-$1,600) - $80 - $120 = -$1,800 Interest: $600 Earning Before Tax: (-$1,800) + $600 = -$1,200 Tax: Not provided 2021: Revenue: $1,500 Cost of Sales: $1,875 Gross Profit: $1,500 - $1,875 = -$375 Selling Expenses: $25 Admin Expenses: $20 Operating Income: (-$375) - $25 - $20 = -$420 Interest: $60 Earning Before Tax: (-$420) + $60 = -$360 Tax: Not provided

Comparative Income Statement Analysis: Both in 2020 and 2021, Azua Corporation incurred losses with negative operating incomes. The net loss decreased from -$1,200 in 2020 to -$360 in 2021. However, without information about the tax expenses, we cannot determine the after-tax income.

b) Comparative Position Statement Analysis: 2020: Total Assets: $3,200 ($100 + $150 + $2,500 + $75 + $100 + $1,200) Total Liabilities: $1,500 ($600 + $150 + $300 + $450) Equity: $1,700 ($3,200 - $1,500) 2021: Total Assets: $4,150 ($150 + $800 + $2,400 + $100 + $150 + $1,500) Total Liabilities: $1,950 ($600 + $600 + $150 + $300 + $300) Equity: $2,200 ($4,150 - $1,950)

Comparative Position Statement Analysis: The total assets increased from $3,200 in 2020 to $4,150 in 2021, indicating overall growth. The total liabilities increased from $1,500 to $1,950, while equity increased from $1,700 to $2,200. These changes suggest an increase in both liabilities and equity.