Question

Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...

Simon Company's year-end balance sheets follow.

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash $ 29,331 $ 34,285 $ 33,956
Accounts receivable, net 83,326 58,217 48,075
Merchandise inventory 105,825 76,144 49,207
Prepaid expenses 9,071 9,089 3,890
Plant assets, net 264,658 246,585 218,472
Total assets $ 492,211 $ 424,320 $ 353,600
Liabilities and Equity
Accounts payable $ 120,109 $ 69,559 $ 47,142
Long-term notes payable secured by
mortgages on plant assets
90,685 98,570 78,927
Common stock, $10 par value 163,500 163,500 163,500
Retained earnings 117,917 92,691 64,031
Total liabilities and equity $ 492,211 $ 424,320 $ 353,600


1. Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)
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?

Express the balance sheets in common-size percents. (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 secured by mortgages on plant assets
Common stock, $10 par
Retained earnings
Total liabilities and equity % % %
  • 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?
    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?

    Show less

    2. Change in accounts receivable unfavorable development.
    3. Change in merchandise inventory unfavorable development.

Homework Answers

Answer #1

1.

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash 6.0% 8.1% 9.6%
Accounts receivable, net 16.9% 13.7% 13.6%
Merchandise inventory 21.5% 17.9% 13.9%
Prepaid expenses 1.8% 2.1% 1.1%
Plant assets, net 53.8% 58.1% 61.8%
Total assets 100.0% 100.0% 100.0%
Liabilities and Equity
Accounts payable 24.4% 16.4% 13.3%
Long-term notes payable secured by 18.4% 23.2% 22.3%
mortgages on plant assets
Common stock, $10 par value 33.2% 38.5% 46.2%
Retained earnings 24.0% 21.8% 18.1%
Total liabilities and equity 100.0% 100.0% 100.0%

2. Unfavorable

3. Unfavorable

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