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 Current Year 1 Year Ago 2 Years Ago $ 29,953 85,945 110,242 9,742 271,795 $ 507,677 $123,883 94,489 $ 34,312 60,046 78,537 9,283 255,475 $ 437,653 $ 71,744 100,660 163,500 101,749 162,500 126,805 $ 507,677 $ 437,653 For both the current year and one year ago, compute the following ratios: $ 36,464 48,619 52,814 3,893 219,310 $ 361,100 $ 49,095 82,197 162,500 67,308 $ 361,100 Exercise 17-6 (Algo) Common-size percents LO P2 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Express the balance sheets in common-size percents. Note: Do not round intermediate calculations and round your final percentage answers to 1 decimal place. SIMON COMPANY Common-Size Comparative Balance Sheets Assets Cash Accounts receivable, net Merchandise inventory December 31 Current Year 1 Year Ago 2 Years Ago % % % Prepaid expenses Plant assets, net Total assets % % % Liabilities and Equity Accounts payable % % % Long-term notes payable Common stock, $10 par Retained earnings Total liabilities and equity % % % < Req 1 Req 2 and 3 >
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
Current Year
1 Year Ago 2 Years Ago
Cash
$ 29,953
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Liabilities and Equity
85,945
110,242
9,742
271,795
$ 507,677
Accounts payable
$ 123,883
Long-term notes payable
Common stock, $10 par value
Retained earnings
Total liabilities and equity
94,489
162,500
126,805
$ 34,312
60,046
78,537
9,283
255,475
$ 437,653
$ 71,744
100,660
163,500
101,749
$ 507,677
$ 437,653
For both the current year and one year ago, compute the following ratios:
$ 36,464
48,619
52,814
3,893
219,310
$ 361,100
$ 49,095
82,197
162,500
67,308
$ 361,100
Exercise 17-6 (Algo) Common-size percents LO P2
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?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Express the balance sheets in common-size percents.
Note: Do not round intermediate calculations and round your final percentage answers to 1 decimal place.
SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31
Current Year 1 Year Ago 2 Years Ago
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
Retained earnings
Total liabilities and equity
%
%
< Req 1
Req 2 and 3 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbb1f7588-e7d5-4669-93fb-38f498dfa5f2%2Fe941af2c-1463-42ad-b3ba-562ee424867b%2Fb38l0b_processed.jpeg&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
