In addition to common-size financial statements, common–base year financial stat
ID: 2728803 • Letter: I
Question
In addition to common-size financial statements, common–base year financial statements are often used. Common–base year financial statements are constructed by dividing the current year account value by the base year account value. Thus, the result shows the growth rate in the account.
Prepare the common-size balance sheet and common–base year balance sheet for the company. Use 2014 as the base year. (Do not round intermediate calculations. Enter your common-size answers as a percent and your common–base year answers as a times. Round your common size answers to 2 decimal places, e.g., 32.16, and common-base year answers to 4 decimal places, e.g., 32.1616.)
In addition to common-size financial statements, common–base year financial statements are often used. Common–base year financial statements are constructed by dividing the current year account value by the base year account value. Thus, the result shows the growth rate in the account.
Explanation / Answer
JARROW CORPORATION Assets 2014( in $) Common Size 2015 Common Size Current Asset Cash 8,964 3.12 % 10,904 3.36 % Accounts receivable 22,353 7.78 % 24,837 7.65 % Inventory 38,722 13.48 % 43,697 13.46 % TOTAL 70,039 24.38 % 79,438 24.47 % Fixed Asset Net Plant and equipment 2,17,270 75.62 % 2,45,240 75.53 % Total assets 2,87,309 100.00 % 3,24,678 100.00 % Liability and Owner Equity Current liabilities Accounts payable 42,798 14.90 % 47,784 14.72 % Notes payable 19,364 6.74 % 18,935 5.83 % Total 62,162 21.64 % 66,719 20.55 % Long-term debt 25,900 9.01 % 32,900 10.13 % Owners' equity Common stock and paid-in surplus 39,900 13.89 % 41,100 12.66 % Retained earnings 1,59,347 55.46 % 1,83,959 56.66 % Total 199247 69.35 % 2,25,059 69.32 % Total liabilities and owners' equity 287309 100.00 % 3,24,678 100.00 %
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