Explanation Given Information: The assets and liabilities of Rayco Inc. for December 31, 2015 are, The assets are $ 105095 in cash, $ 6503 in accounts receivable, $ 190014 in merchandise inventory, $ 32507 in equipment. The liabilities are $ 6007 in accounts payable, $ 4761 in wages payable, $ 281017 in mortgage note payable. The owner’s capital is $ 42334 . The assets and liabilities of Rayco Inc. for December 31, 2016 are, The assets are $ 114975 in cash, $ 8918 in accounts receivable, $ 187915 in merchandise inventory, $ 29719 in equipment. The liabilities are $ 6832 in accounts payable, $ 5215 in wages payable, $ 279409 in mortgage note payable. The owner’s capital is $ 50071 . Formula used: Steps to find the balance sheet, Steps 1: List the current assets and then draw a single line under the last entry Steps 2: Add all the entries and the total current assets should be recorded and under the total draw a single line. Now, repeat step (1) for plant and equipment assets and step (2) for total plant and equipment asses. Add the category totals and under the grand total sketch a double line. As, Total assets = Total current assets + Total plant and equipment Find and record the total liabilities using the steps. Follow step (1) for current liabilities and step (2) for total current liabilities. Repeat step (1) for long term liabilities and step (2) for total long-term liabilities. Add the category totals and underneath the total draws a single line. As, Total liabilities = Total current liabilities + Total long term liabilities Step 3: Find and record the total owner’s equity. List the entries of equity and under the last entry draw a single line. Add all the entries and under the last entry draw a single line. Find and record the total liabilities and owner’s equality: As the total liabilities to the total owner’s equity and draw a double line underneath the grand total. Total liabilities and owner's equality = Total liabilities + Owner's equity Step 4: Confirm that the double line grand totals from step 1 and step 4 are the same. Total Assets = Total liabilities + Owner's equity Step 5: Create an additional column label amount of increase (decrease). Record the difference for each yearly item, when smaller amount is subtracted from the larger amount. If the earlier year’s amount is larger than the latter year’s amount, record the difference from step 5 as a decrease by using parenthesis. Step 6: Create an additional column labels percent increase or decrease. For each yearly item divide the amount of increase (decrease) by the earlier year’s amount, multiply by 100% and record the difference as percentage. Calculation: The assets and liabilities of Rayco Inc. for December 31, 2015 are, The assets are $ 105095 in cash, $ 6503 in accounts receivable, $ 190014 in merchandise inventory, $ 32507 in equipment. The liabilities are $ 6007 in accounts payable, $ 4761 in wages payable, $ 281017 in mortgage note payable. The owner’s capital is $ 42334 . The assets and liabilities of Rayco Inc. for December 31, 2016 are, The assets are $ 114975 in cash, $ 8918 in accounts receivable, $ 187915 in merchandise inventory, $ 29719 in equipment. The liabilities are $ 6832 in accounts payable, $ 5215 in wages payable, $ 279409 in mortgage note payable. The owner’s capital is $ 50071 . Consider the comparative balance sheet, Rayco Inc. Comparative Balance Sheet 31 December, 2015 and 2016 2016 2015 Assets Current assets Cash $ 114 , 975 $105,095 Accounts receivable $ 8 , 918 $6,503 Merchandise inventory $ 187 , 915 $190,014 Equipment $ 29 , 719 $32,507 Total assets $ 3 4 1 , 5 2 7 $ 3 3 4 , 1 1 9 Liabilities Current liabilities Accounts payable $ 6 , 832 $ 6 , 007 Wages payable $ 5 , 215 $ 4 , 761 Mortgage note payable $ 279 , 409 $ 281 , 017 Total liabilities $ 2 9 1 , 4 5 6 $ 2 9 1 , 7 8 5 Owner's Equity B. Pierson, capital $ 50 , 071 $ 42 , 334 Total liabilities and owner equity $ 3 4 1 , 5 2 7 $ 3 3 4 , 1 1 9 Consider the difference of each category in the balance sheet, Cash: $ 114975 − $ 105095 = $ 9880 (increase) Percent increase in cash is 9880 105095 × 100 % = 9

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ISBN: 8220103633802

Author: NOBLE

Publisher: RENT PEARS

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Chapter 21.1, Problem 3-3SC

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To calculate: The horizontal analysis of the balance sheet for Rayco Inc. in the year 2015 and 2016 given that the owner’s capital in 2015 is $42334 and the owner’s capital in 2016 is $50071.

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Chapter 21.1, Problem 3-2SC

Chapter 21.1, Problem 3-4SC

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The horizontal analysis of the balance sheet for Rayco Inc. in the year 2015 and 2016 given that the owner’s capital in 2015 is $ 42334 and the owner’s capital in 2016 is $ 50071 .

Solution Summary: The author calculates the horizontal analysis of the balance sheet for Rayco Inc. in the year 2015 and 2016.

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To calculate: The horizontal analysis of the balance sheet for Rayco Inc. in the year 2015 and 2016 given that the owner’s capital in 2015 is $42334 and the owner’s capital in 2016 is $50071.

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