Question

Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	31,800			$	35,625		$	37,800
Accounts receivable, net			89,500				62,500			50,200
Merchandise inventory			112,500				82,500			54,000
Prepaid expenses			10,700				9,375			5,000
Plant assets, net			278,500				255,000			230,500
Total assets		$	523,000			$	445,000		$	377,500
Liabilities and Equity
Accounts payable		$	129,900			$	75,250		$	51,250
Long-term notes payable secured by mortgages on plant assets			98,500				101,500			83,500
Common stock, $10 par value			163,500				163,500			163,500
Retained earnings			131,100				104,750			79,250
Total liabilities and equity		$	523,000			$	445,000		$	377,500

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. (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?

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

Answer 1

			Simon company
				2017	2016	2015
	Assets
	Cash			6.1%	8.0%	10.0%
	Accounts receivable,net			17.1%	14.0%	13.3%
	Merchandise inventory			21.5%	18.5%	14.3%
	prepaid expenses			2.0%	2.1%	1.3%
	Plant assets,net			53.3%	57.3%	61.1%
	Total Assets			100.0%	100.0%	100.0%
	Liabilities and Equity
	Accounts paybale			24.8%	16.9%	13.6%
	long term notes payable			18.8%	22.8%	22.1%
	Common stock			31.3%	36.7%	43.3%
	Retained earnings			25.1%	23.5%	21.0%
	Total liabilities & Equity			100.0%	100.0%	100.0%
2)	unfavourable
3)	unfavourable