Question

n 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.

  

Construct the common-size balance sheet and common-base year balance sheet for the company. Use 2018 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.)

JARROW CORPORATION 2018 Common-size 2019 Common-size Common-base year Assets Current assets Cash $8,264 % $10,204 % Accounts receivable 20,953 % 23,437 % Inventory 37,322 % 42,297 % Total $66,539 % $75,938 % Fixed assets Net plant and equipment $215,870 % $243,840 % Total assets $282,409 % $319,778 % Liabilities and Owners’ Equity Current liabilities Accounts payable $41,398 % $46,384 % Notes payable 17,964 % 17,535 % Total $59,362 % $63,919 % Long-term debt $24,500 % $31,500 % Owners' equity Common stock and paid-in surplus $38,500 % $39,700 % Retained earnings 160,047 % 184,659 % Total $198,547 % $224,359 % Total liabilities and owners' equity $282,409 % $319,778 %

Answer 1

For Common-size % = (% of line item) / (total of the assets/liabilities)

Common-base year % = (% of line item) / (% of line item in base year)

Particulars	2018	Common-size	2019	Common-size	Common-base year(2018)
Assets
Current assets
Cash	$8,264	2.93%	$10,204	3.19%	123.4753%
Accounts receivable	20,953	7.42%	23,437	7.33%	111.8551%
Inventory	37,322	13.22%	42,297	13.23%	113.3299%
Total	$66,539	23.56%	$75,938	23.75%	114.1256%
Fixed assets
Net plant and equipment	$215,870	76.44%	$243,840	76.25%	112.9569%
Total assets	$282,409	100.00%	$319,778	100.00%	113.2322%
Liabilities and Owners’ Equity
Current liabilities
Accounts payable	$41,398	14.66%	$46,384	14.51%	112.0441%
Notes payable	17,964	6.36%	17,535	5.48%	97.6119%
Total	$59,362	21.02%	$63,919	19.99%	107.6766%
Long-term debt	$24,500	8.68%	$31,500	9.85%	128.5714%
Owners' equity
Common stock and paid-in surplus	$38,500	13.63%	$39,700	12.41%	103.1169%
Retained earnings	160,047	56.67%	184,659	57.75%	115.3780%
Total	$198,547	70.30%	$224,359	70.16%	113.0004%
Total liabilities and owners' equity	$282,409	100.00%	$319,778	100.00%	113.2322%