Question

just dew it corporation reports the following balance sheet information for 2017 and 2018 7,800

Assets 2017 2018 JUST DEW IT CORPORATION 2017 and 2018 Balance Sheets Liabilities and Owners' Equity 2018 2017 Current liabilities $ 14,200 Accounts payable $ 37,500 23,000 Notes payable 11,850 52,200 Current assets Cash Accounts receivable Inventory $ 8,850 15,750 34,650 $ 46,600 19,400 Total $ 59,250 $ 89,400 Total $ 49,350 $ 27,000 $ 66,000 $ 24,000 Long-term debt Owners' equity Common stock and paid-in $ 45,000 surplus Retained earnings 178,650 $ 45,000 265,000 Net plant and equipment $ 240,750 $ 310,600 Total $223,650 $ 310,000 Total assets $300,000 $400,000 Total liabilities and owners' equity $300,000 $400,000 Prepare the 2018 common-base year balance sheet for Just Dew it. (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Answer 1

Solution :

Preparation of common base year balance sheet:

The common base year balance sheet is prepared using the formula

= Value of the Asset or liability as per the Common Year / Value of the Asset or liability as per the Base Year

= Value of the Asset or liability in 2018 / Value of the Asset or liability in 2017

For example: As per the Information given in the question

The base year is 2017 and the common year is 2018

Also, Cash in Year 2018 = $ 14,200 and Cash in Year 2017 = $ 8,850

Thus the Common base year ratio of Cash is = $ 14,200 / $ 8,850 = 1.6045

Similarly the values for the other balance sheet items can be obtained using the above process.

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

04.02.2020 - Microsoft Excel XES FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Assets 2017 2018 2018 Common Base year balance sheet (with 2017 as base Year) Current Assets Cash Accounts Receivable Inventory Total 8,850.00 15,750.00 34,650.00 59,250.00 $ $ $ $ 14,200.00 23,000.00 52,200.00 89,400.00 1.6045 1.4603 1.5065 1.5089 $ Net Plant and Equipment $ 240,750.00 $ 310,600.00 1.2901 Total Assets $ 300,000.00 $ 400,000.00 1.3333 Liabilities and Owners' Equity Current Liabilities Accounts Payable Notes Payable Total $ $ $ 37,500.00 $ 11,850.00 $ 49,350.00 $ 46,600.00 19,400.00 66,000.00 1.2427 1.6371 1.3374 Long term debt $ 27,000.00 $ 24,000.00 0.8889 Owners' Equity Common stock and paid in surplus Retained Earnings $ $ 45,000.00 178,650.00 $ $ 45,000.00 265,000.00 1.0000 1.4833 Total $ 223,650.00 $ 310,000.00 1.3861 Total liabilities and owners' equity $ 300,000.00 $ 400,000.00 1.3333