Question

Exercise 13-6 Common-size percents LO P2 Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 30,524 88.468 106.826 9.927 276,488 $ 512,233 $ 35,680 $ 37,902 63,676 50,046 80,058 53,837 EL 9,366 4,211 252,800 225,704 $ 441,580 $ 371,700 124.995 $ 73,134 $ 48,574 93.411 100,548 79,681 163,500 163,500 163,500 130, 327104,39879,945 $ 512,233 $ 441,580 $ 371, 700 1. Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.) 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 and 3

Answer 1

2 Yrs Ago Common Size Comparative Balance Sheet Current Yr1 Yr Ago Assets cash 6.0% 8.1% Accounts Receiables ,net 17.3% 14.4% Merchadise inventory 20.9% 18.1% Prepaid Expenses 1.9% 2.1% Plant Asset ,Net 54.0% 57.2% Total assets 100.0% 100.0% Liabilities and Equity Account Payables 24.4% 16.6% Lon-term note Paaybles 18.2% 22.8% Common Stock $10 Each 31.9% 37.0% Retained Earnings 25.4% 23.6% Total Liabilites and Equity 100.0% 100.0% 10.2% 13.5% 14.5% 1.1% 60.7% 100.0% 13.1% 21.4% 44.0% 21.5% 100.0% Common size balance Sheet the Statement which contains the proportion of each element with the Total Asest Percent = Amount of Item / Total Assets Change in the Accounts receivables as a % of Total Assets for the Last three Years Change in Account Receivables Unfavorable Change in the Invenotry as a % of Total Assets for the Last three Years Change in Invenotry Unfavorable