Common-size statements
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Following are the balance sheets for Howard's Hammocks for December 31, 2009 and 2008.
HOWARD'S HAMMOCKS COMPARATIVE BALANCE SHEETS
2009 2008
Cash $130,000 $110,000
Accounts receivable 130,000 120,000
Inventory 225,000 215,000
Prepaid insurance 25,000 30,000
Total current assets $510,000 $475,000
Long-term investments $110,000 $75,000
Land 200,000 175,000
Property and equipment 215,000 95,000
Accumulated depreciation (105,000) (80,000)
$420,000 $265,000
Total assets $930,000 $740,000
Accounts payable $60,000 $50,000
Payroll payable 10,000 8,000
Taxes payable 10,000 9,000
Total current liabilities $80,000 $67,000
Notes payable 100,000 80,000
Capital stock 500,000 400,000
Retained earnings 250,000 193,000
Total liabilities and stockholders' equity $930,000 740,000
Required
Using the preceding income statement figures, prepare common-size statements for 2009 and 2008.
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The solution explains how to prepare common-size statements
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