Prepaid expense 25000 075 25000 090 fixed assets

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Prepaid expense 25,000 0.75% 25,000 0.90% Fixed assets 2,585,000 77.40% 1,950,000 70.02% Accumulated depreciation (1,000,000) -29.94% (750,000) -26.93% Total $3,340,000 100.00% $2,785,000 100.00% Liabilities and Stockholders’ Equity Accounts payable $50,000 1.50% $75,000 2.69% Accrued expenses 170,000 5.09% 200,000 7.18% Bonds payable 450,000 13.47% 190,000 6.82% Capital stock 2,100,000 62.87% 1,770,000 63.55% Retained earnings 570,000 17.07% 550,000 19.75% Total $3,340,000 100.00% $2,785,000 100.00% GILMOUR COMPANY Comparative Balance Sheet December 31, 2013 and 2012 December 31 Increase or (Decrease) Assets 2013 2012 $ Change % Change Cash $180,000 $275,000 ($95,000) -34.55% Accounts receivable (net) 220,000 155,000 65,000 41.94% Short-term investments 270,000 150,000 120,000 80.00% Inventories 1,060,000 980,000 80,000 8.16% Prepaid expense 25,000 25,000 0 0.00% Fixed assets 2,585,000 1,950,000 635,000 32.56% Accumulated depreciation (1,000,000) (750,000) (250,000) 33.33% Total $3,340,000 $2,785,000 $555,000 19.93% Liabilities and Stockholders’ Equity Accounts payable $50,000 $75,000 ($25,000) -33.33% Accrued expenses 170,000 200,000 (30,000) -15.00% Bonds payable 450,000 190,000 260,000 136.84% Capital stock 2,100,000 1,770,000 330,000 18.64% Retained earnings 570,000 550,000 20,000 3.64% Total $3,340,000 $2,785,000 $555,000 19.93% Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse P 24-4 (Horizontal and Vertical Analysis) Presented below are comparative balance sheets for the Gilmour Company. (a) Prepare a comparative balance sheet of Gilmour Company showing the percent each item is of the total assets or total liabilities and stockholders' equity. (b) Prepare a comparative balance sheet of Gilmour Company showing the dollar change and the percentage change for each item. (c) Of what value is the additional information provided in part (a)? The component percentage (common-size) balance sheet makes easier analysis possible. It actually reduces total assets and total liabilities and stockholders’ equity to a common base. Thus, the statement is simplified into figures that can be more readily grasped. It can also show relationships that might be out of line. For example, management might believe that accounts receivable of 6.59% is rather low. Perhaps the company is not granting enough credit. The increased percentage of bonds payable from 6.82% to 13.47% indicates increased leverage which may reflect negatively on the company’s debt-paying ability and long-run solvency. These percentages can be compared with those of other successful firms to see how the firm stands and to see where possible improvements could be made. (d) Of what value is the additional information provided in part (b)? A statement such as that in part (b) is a good analysis and breakdown of the total change in assets and liabilities and stockholders’ equity. The statement breaks down the 19.93% increase and makes it easier for analysts to spot any unusual items. The increase is explained on the asset side by an increase in accounts receivable, short-term investments, and fixed assets and on the liability side by an increase in bonds payable and capital stock. This statement makes analysis of the year’s operations generally easier.
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e2198da11056adcbc057843b8d72e7092300cf16.xlsx, Problem 24-4, Page 8 of 8, 03/29/2012, 01:32:43 Name: Date: Instructor: Course: GILMOUR COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $180,000 $275,000 Accounts receivable (net) 220,000 155,000 Short-term investments 270,000 150,000 Inventories 1,060,000 980,000 Prepaid expense 25,000 25,000 Fixed assets 2,585,000 1,950,000 Accumulated depreciation (1,000,000) (750,000) $3,340,000 $2,785,000
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