Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Current Year $ 28,270 81,936 106,141 9,288 258,363 $ 483,998 $ 119,310 90,082 162,500 112,106 $ 483,998 1 Year Ago $ 33,713 57,245 77,961 8,587 239,734 $ 417,240 Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity For both the current year and one year ago, compute the following ratios: Exercise 13-6 (Algo) Common-size percents LO P2 2 Years Ago $ 33,734 45,896 48,386 3,825 215,859 $ 347,700 $ 71,924 94,046 162,500 88,770 $ 417,240 $ 46,814 76,073 162,500 62,313 $ 347,700 1. Express the balance sheets in common-size percents. 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?
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Simon Company's year-end balance sheets follow.
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
Common stock, $10 par value
Retained earnings
Total liabilities and equity
Assets
Cash
Exercise 13-6 (Algo) Common-size percents LO P2
Req 1
For both the current year and one year ago, compute the following ratios:
Req 2 and 3
1. Express the balance sheets in common-size percents.
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?
Complete this question by entering your answers in the tabs below.
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?
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Liabilities and Equity
Accounts payable
Current Year
SIMON COMPANY
Long-term notes payable
Common stock, $10 par
Retained earnings
Total liabilities and equity
Express the balance sheets in common-size percents.
Note: Do not round intermediate calculations and round your final percentage answers to 1 decimal place.
Common-Size Comparative Balance Sheets
December 31
$ 28,270
81,936
106,141
9,288
258,363
$ 483,998
Current Year
$ 119,310
90,082
162,500
112,106
$ 483,998
%
%
%
%
< Req 1
1 Year Ago
$ 33,713
57,245
77,961
8,587
239,734
$ 417,240
$71,924
94,046
162,500
88,770
$ 417,240
1 Year Ago 2 Years Ago
%
%
%
%
2 Years Ago
$ 33,734
45,896
48,386
3,825
215,859
$ 347,700
%
%
%
$ 46,814
76,073
162,500
62,313
$ 347,700
%
Req 2 and 3 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb7f0a31e-149e-4057-91bc-41e0ddd41717%2F23679cfe-2f4e-4c1b-9ee8-1af308eb2b82%2Fwhf3p8l_processed.png&w=3840&q=75)
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