Question

Ch 13 Ex 13-6 i Saved Help Save & Exit Submit Check my work 1 Simon Company's year-end balance sheets follow. 1 Yr Ago At December 31 Current Yr 2 Yrs Ago Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net 27,775 82,990 102,258 8,945 263,355 34,475 $ 33,150 46,933 50,489 3,873 18 59,159 78,175 8,698 237,875 polnts 210,755 418,382 $ 345,200 $ 485,323 Total assets eBook Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Hint 124,471 $ 72,121 $ 46,478 Ask 88,504 163,500 108,848 78,578 163,500 56,644 95,266 163,500 Print 87,495 485,323 418,382 $ 345,200 Total liabilities and equity References 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.

Answer 1

Ans. 1	SIMON   COMPANY
	Common Size Comparative Balance Sheets
	December 31, 2015 - 2017
		Current Year		1 Year Ago		2 Years Ago
	Assets:	Amount	%	Amount	%	Amount	%
	Cash	$27,775	5.72%	$34,475	8.24%	$33,150	9.60%
	Accounts receivables	$82,990	17.10%	$59,159	14.14%	$46,933	13.60%
	Merchandise inventory	$102,258	21.07%	$78,175	18.69%	$50,489	14.63%
	Prepaid expenses	$8,945	1.84%	$8,698	2.08%	$3,873	1.12%
	Plant assets, net	$263,355	54.26%	$237,875	56.86%	$210,755	61.05%
	Total assets	$485,323	100.00%	$418,382	100.00%	$345,200	100.00%
	Liabilities and Equity:
	Accounts payable	$124,471	31.12%	$72,121	18.03%	$46,478	11.62%
	Long term notes payable	$88,504	18.24%	$95,266	22.77%	$78,578	22.76%
	Common stock	$163,500	33.69%	$163,500	39.08%	$163,500	47.36%
	Retained earnings	$108,848	22.43%	$87,495	20.91%	$56,644	16.41%
	Total Liabilities and Equity	$485,323	100.00%	$418,382	100.00%	$345,200	100.00%
	*Calculations for Common Size Balance Sheet:
	Amount is percentage from assets side =   Particular amount from assets side / Total assets * 100
	Amount is percentage from liabilities side =   Particular amount from liability side / Total liabilities and owner's equity * 100
Ans. 2	Unfavorable
	Increase in accounts receivable means business will get it's money in longer time.
	If the money will be back in longer time then it will adversely impact the cash flow of business.
Ans. 3	Favorable
	Increase in inventory is good for business.. If inventory increases, as a result gross profit & net profit also increases.