Question

Simon Company's year-end balance sheets follow.

At December 31	Current Yr				1 Yr Ago			2 Yrs Ago
Assets
Cash		$	36,724		$	43,360		$	44,273
Accounts receivable, net			106,437			73,604			60,801
Merchandise inventory			132,473			99,268			63,502
Prepaid expenses			12,304			11,610			5,018
Plant assets, net			340,789			314,164			273,606
Total assets		$	628,727		$	542,006		$	447,200
Liabilities and Equity
Accounts payable		$	151,856		$	91,599		$	58,440
Long-term notes payable secured by mortgages on plant assets			115,837			124,661			98,831
Common stock, $10 par value			163,500			163,500			163,500
Retained earnings			197,534			162,246			126,429
Total liabilities and equity		$	628,727		$	542,006		$	447,200

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?

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		%		%		%

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

Answer 1

Solution

Simon Company
Common Size Comparative balance Sheet
december 31st , 2015-2017
	Current year	1 Year ago	2 Years ago
Assets
Cash	5.8%	8.0%	9.9%
Accounts Receivables , net	16.9%	13.6%	13.6%
Merchandise Inventory	21.1%	18.3%	14.2%
Prepaid Expenses	2.0%	2.1%	1.1%
Plant Assets ,Net	54.2%	58.0%	61.2%
Total Assets	100.0%	100.0%	100.0%
Liabilities and Equity
Accounts Payable	24.2%	16.9%	13.1%
Long Term Notes Payable Secured by mortgage on palnt assets	18.4%	23.0%	22.1%
Common Stock $10 Par	26.0%	30.2%	36.6%
Retained Earnings	31.4%	29.9%	28.3%
Total Liabilities and Equity	100.0%	100.0%	100.0%

.

Change in accounts receivable	Favorable
Change in merchandise inventory	Favorable

Both Inventory and accounts receivable are improved