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AP14-13 (a) & (b)

Common-Size Financial Statements [LO 1, 2]

The financial statements for the Bao Corporation are given below.

Bao Corporation
Comparative Balance Sheets
December 31, 2012 and 2011
		2012	2011
Assets
Current assets:
	Cash	$2,500	$1,780
	Accounts receivable net	14,100	9,700
	Inventory	16,100	13,300
	Prepaid expenses	680	310
	Total current assets	33,380	25,090
Property and equipment:
	Land	107,000	107,000
	Buildings and equipment, net	63,600	67,000
Total property and equipment		170,600	174,000
Total assets		203,980	199,090

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable	$23,600	$28,200
	Accrued expenses	2,100	6,230
	Notes payable, short term	660	280
Total current liabilities		26,360	34,710
Long-term liabilities:
	Bonds payable	6,500	6,980
	Notes payable	49,200	47,600
Total liabilities		82,060	89,290
Stockholders’ equity:
	Common stock	14,000	14,000
	Additional paid-in capital	25,600	25,000
	Total paid-in capital	39,600	39,000
	Retained earnings	82,320	70,800
Total stockholders’ equity		121,920	109,800
Total liabilities and stockholders’ equity		$203,980	$199,090

Bao Corporation
Comparative Income Statement
For the Year Ended December 31, 2012 and 2011
		2012	2011
Sales		$160,000	$135,000
Cost of goods sold		85,000	77,800
Gross margin		75,000	57,200
Operating expenses:
	Selling expenses	28,100	22,400
	Administrative expenses	20,500	16,400
Total operating expenses		48,600	38,800
Income from operations		26,400	18,400
Interest expense		6,920	4,750
Income before taxes		19,480	13,650
Less income taxes		7,792	5,460
Net income		$11,688	$8,190

Present the balance sheet with each account balance as a percent of total assets. (Round answers to 1 decimal place, e.g. 2.1%.)

Bao Corporation
Comparative Balance Sheet
December 31, 2012 and 2011

		2012		2011

Assets
Current assets:
	Cash	$2,500	%	$1,780	%
	Accounts receivable, net	14,100	%	9,700	%
	Inventory	16,100	%	13,300	%
	Prepaid expenses	680	%	310	%
Total current assets		33,380	%	25,090	%
Property and equipment:
	Land	107,000	%	107,000	%
	Building and equipment, net	63,600	%	67,000	%
Total property and equipment		$170,600	%	174,000	%
Total Assets		$203,980	%	$199,090	%

Liabilities and stockholders equity
Current liabilities
	Accounts payable	$23,600	%	$28,200	%
	Accrued expenses	2,100	%	6,230	%
	Notes payable, short term	660	%	280	%
Total current liabilities		26,360	%	34,710	%
Long-term liabilities:
	Bonds payable	6,500	%	6,980	%
	Notes payable	49,200	%	47,600	%
Total long-term liabilities		55,700	%	54,580	%
Total liabilities		82,060	%	89,290	%

Stockholders’ equity
	Common stock	14,000	%	14,000	%
	Additional paid-in capital	25,600	%	25,000	%
	Total paid-in capital	39,600	%	39,000	%
	Retained earnings	82,320	%	70,800	%
Total stockholders’ equity		121,920	%	109,800	%
Total liabilities and stockholders’ equity		$203,980	%	$199,090

Present the income statement with each balance as a percent of sales. (Round answers to 1 decimal place, e.g. 2.1%.)

Bao Corporation
Comparative Income Statement
For the Year Ended December 31, 2012 and 2011

		2012		2011
Net sales		$160,000	%	$135,000	%
Cost of goods sold		85,000	%	77,800	%
Gross margin		75,000	%	57,200	%
Operating expenses:
	Selling expenses	28,100	%	22,400	%
	Administrative expenses	20,500	%	16,400	%
Total operating expenses		48,600	%	38,800	%
Operating income		26,400	%	18,400	%
Interest expense		6,920	%	4,750	%
Income before taxes		19,480	%	13,650	%
Income taxes		7,792	%	5,460	%
Net income		$11,688	%	$8,190	%