Question

Selected comparative financial statements of Korbin Company follow:

KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
	2017			2016			2015
Sales	$	496,208		$	380,136		$	263,800
Cost of goods sold		298,717			237,965			168,832
Gross profit		197,491			142,171			94,968
Selling expenses		70,462			52,459			34,822
Administrative expenses		44,659			33,452			21,895
Total expenses		115,121			85,911			56,717
Income before taxes		82,370			56,260			38,251
Income taxes		15,321			11,533			7,765
Net income	$	67,049		$	44,727		$	30,486

KORBIN COMPANY
Comparative Balance Sheets
December 31, 2017, 2016, and 2015
	2017			2016			2015
Assets
Current assets	$	53,975		$	42,229		$	56,450
Long-term investments		0			1,200			3,890
Plant assets, net		98,713			104,836			62,498
Total assets	$	152,688		$	148,265		$	122,838
Liabilities and Equity
Current liabilities	$	22,292		$	22,091		$	21,497
Common stock		73,000			73,000			55,000
Other paid-in capital		9,125			9,125			6,111
Retained earnings		48,271			44,049			40,230
Total liabilities and equity	$	152,688		$	148,265		$	122,838

1. Complete the below table to calculate each year's current ratio.

2. Complete the below table to calculate income statement data in common size percent.

3. Complete the below table to calculate the balance sheet data in trend percents with 2015 as the base year.

Answer 1

Correct Answer:

Requirement 1:

		2017	2016	2015
A	Current assets	$ 53,975.00	$ 42,229.00	$ 56,450.00
B	Current liabilities	$ 22,292.00	$ 22,091.00	$ 21,497.00
A/B	Current ratio	2.42	1.91	2.63

Requirement 2:

KORBIN COMPANY
Common size analysis
	2017		2016		2015
Sales	$     496,208.00	100.00%	$      380,136.00	100.00%	$      263,800.00	100.00%
Cost of Goods Sold	$     298,717.00	60.20%	$      237,965.00	62.60%	$      168,832.00	64.00%
Gross Profit	$     197,491.00	39.80%	$      142,171.00	37.40%	$        94,968.00	36.00%
Selling Expenses	$        70,462.00	14.20%	$        52,459.00	13.80%	$        34,822.00	13.20%
Administrative Expenses	$        44,659.00	9.00%	$        33,452.00	8.80%	$        21,895.00	8.30%
Total Expenses	$     115,121.00	23.20%	$        85,911.00	22.60%	$        56,717.00	21.50%
Income before taxes	$        82,370.00	16.60%	$        56,260.00	14.80%	$        38,251.00	14.50%
Income Taxes	$        15,321.00	3.09%	$        11,533.00	3.03%	$           7,765.00	2.94%
Net Income	$        67,049.00	13.51%	$        44,727.00	11.77%	$        30,486.00	11.56%

Requirement 3:

KORBIN COMPANY
Balance sheet data in trend percent
December 31, 2017, 2016 and 2015
	2017	2016	2015
Assets
Current assets	95.62%	74.81%	100.00%
Long term Investments	0.00%	30.85%	100.00%
Plant assets, net	157.95%	167.74%	100.00%
Total assets	124.30%	120.70%	100.00%
Liabilities and Equity
Current liabilities	103.70%	102.76%	100.00%
Common stock	132.73%	132.73%	100.00%
Other paid in Capital	149.32%	149.32%	100.00%
Retained Earnings	119.99%	109.49%	100.00%
Total Liabilities and Equity	124.30%	120.70%	100.00%

End of answer.

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