Common-Size and Common-Base Year Financial Statements 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. Using the following financial statements, construct the common-size balance sheet and common base year balance sheet for the company. Use 2006 as the base year.

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Answer #1

Prepare the common size balance sheet for 2006 using the information given:

Common Size Balance Sheet for the Year 2006

Particulars

2006

Common size Balance Sheet

Assets

Current Assets

Cash

$10,168

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2.54%

Accounts Receivable

$27,145

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6.77%

Inventory

$59,324

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14.80%

Total

$96,637

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24.11%

Fixed Assets

Net Plant and Equipment

$304,165

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75.89%

Total Assets

$400,802

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100%

Current Liabilities

Accounts Payable

$73,185

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18.26%

Notes Payable

$39,125

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9.76%

Total

$112,310

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28%

Long-term debt

$50,000

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12.47%

Owner’s equity

Common stock and paid-in surplus

$80,000

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19.96%

Accumulated retained earnings

$158,492

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39.54%

Total

$238,492

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59.50%

Total liabilities and owner’s equity

$400,802

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100%

Prepare the common size balance sheet for 2007 using the information given: