Question

Exercise 14-7 Trend Percentages [LO14-1] Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Sales $ 4,542,180 $ 4,808,250 $ 5,080,450 $ 5,484,830 $ 5,683,230 Cash $ 95,706 $ 103,151 $ 102,481 $ 79,325 $ 65,455 Accounts receivable, net 404,163 424,950 436,823 509,990 564,813 Inventory 809,570 877,017 834,956 891,516 912,503 Total current assets $ 1,309,439 $ 1,405,118 $ 1,374,260 $ 1,480,831 $ 1,542,771 Current liabilities $ 301,363 $ 342,540 $ 331,353 $ 321,208 $ 402,975 Required: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Answer 1

Ans.

Particulars	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	$	4,542,180	$	4,808,250	$	5,080,450	$	5,484,830	$	5,683,230
Cash	$	95,706	$	103,151	$	102,481	$	79,325	$	65,455
Accounts receivable, net		404,163		424,950		436,823		509,990		564,813
Inventory		809,570		877,017		834,956		891,516		912,503
Total current assets	$	1,309,439	$	1,405,118	$	1,374,260	$	1,480,831	$	1,542,771
Current liabilities	$	301,363	$	342,540	$	331,353	$	321,208	$	402,975

Trend Percentage = Amount of financial statement data / Amount of Base Year * 100

Asset, Liability and Sales data in trend percentage using Year 1 as the base year:

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	100.00%	105.86%	111.85%	120.75%	125.12%
Current assets:
Cash	100.00%	107.78%	107.08%	82.88%	68.39%
Accounts receivable	100.00%	105.14%	108.08%	126.18%	139.75%
Inventory	100.00%	108.33%	103.14%	110.12%	112.71%
Total current assets	100.00%	107.31%	104.95%	113.09%	117.82%
Current liabilities	100.00%	113.66%	109.95%	106.59%	133.72%