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 \$ 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

#### Homework Answers

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%

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 Change in accounts receivable Favorable Change in merchandise inventory Favorable

Both Inventory and accounts receivable are improved

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