Chapter 13: Q1PSA (page 619)

Selected comparative financial statements of Haroun Company follow.
HAROUN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017–2011
\( thousands 2017 2016 2015 2014 2013 2012 2011
Sales . . . . . . . . . . . . . . . . . . . . . . . \)1,694 \(1,496 \)1,370 \(1,264 \)1,186 \(1,110 \)928
Cost of goods sold . . . . . . . . . . . . 1,246 1,032 902 802 752 710 586
Gross profit . . . . . . . . . . . . . . . . . . 448 464 468 462 434 400 342
Operating expenses . . . . . . . . . . . 330 256 234 170 146 144 118
Net income . . . . . . . . . . . . . . . . . . \( 118 \) 208 \( 234 \) 292 \( 288 \) 256 \(224
HAROUN COMPANY
Comparative Balance Sheets
December 31, 2017–2011
\) thousands 2017 2016 2015 2014 2013 2012 2011
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \( 58 \) 78 \( 82 \) 84 \( 88 \) 86 \( 89
Accounts receivable, net . . . . . . . . . . . . . 490 514 466 360 318 302 216
Merchandise inventory . . . . . . . . . . . . . . . 1,838 1,364 1,204 1,032 936 810 615
Other current assets . . . . . . . . . . . . . . . . . 36 32 14 34 28 28 9
Long-term investments . . . . . . . . . . . . . . 0 0 0 146 146 146 146
Plant assets, net . . . . . . . . . . . . . . . . . . . . 2,020 2,014 1,752 944 978 860 725
Total assets . . . . . . . . . . . . . . . . . . . . . . . . \)4,442 \(4,002 \)3,518 \(2,600 \)2,494 \(2,232 \)1,800 Liabilities and Equity
Current liabilities . . . . . . . . . . . . . . . . . . . . \(1,220 \)1,042 \( 718 \) 614 \( 546 \) 522 \( 282
Long-term liabilities . . . . . . . . . . . . . . . . . 1,294 1,140 1,112 570 580 620 400
Common stock . . . . . . . . . . . . . . . . . . . . . 1,000 1,000 1,000 850 850 650 650
Other paid-in capital . . . . . . . . . . . . . . . . . 250 250 250 170 170 150 150
Retained earnings . . . . . . . . . . . . . . . . . . 678 570 438 396 348 290 318
Total liabilities and equity . . . . . . . . . . . . . \)4,442 \(4,002 \)3,518 \(2,600 \)2,494 \(2,232 \)1,800
Required
1. Compute trend percents for all components of both statements using 2011 as the base year. (Round percents to one decimal.)

Expert verified

The trend in net income percentage of 2017 is 52.7%and for total assets of balance sheet trend percentage in 2017 is 246.8%.

Step by step solution

Trend analysis can be described as a form of horizontal analysis showing us the various data patterns over many years.

Haroun Company
Balance sheet Trends
For the year ended December 31, 2017-2011
	2017 (%)	2016 (%)	2015 (%)	2014 (%)	2013 (%)	2012 (%)	2011 (%)
Assets
Cash	65.2	87.6	92.1	94.4	98.9	96.6	100
Accounts Receivables	226.9	238.0	215.7	166.7	147.2	139.8	100
Merchandise Inventory	298.2	221.8	195.8	167.8	152.2	131.7	100
Other Current Assets	400.0	355.6	155.6	377.8	311.1	311.1	100
Long term Investments	0.0	0.0	0.0	100.0	100.0	100.0	100
Plant Assets	278.6	277.8	241.7	130.2	1349	118.6	100
Total Assets	246.8	222.3	195.4	144.4	138.6	124.0	100

Liabilities and Equity
Current liabilities	432.6	369.5	254.6	217.7	193.6	185.1	100
Long-term Liabilities	323.5	285.0	278.0	142.5	145.0	155.0	100
Common Stock	153.8	153.8	153.8	130.8	130.8	100.0	100
Other paid-in capital	166.7	166.7	166.7	113.3	113.3	100.0	100
Retained Earnings	213.2	179.7	137.7	124.5	109.4	91.2	100
Total Liabilities and Equity	246.8	222.3	195.4	144.4	138.6	124.0	100

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1	Equity ratio	6	Accounts receivable turnover
2	Return on total assets	7	Debt-to-equity ratio
3	Dividend yield	8	Times interest earned
4	Book value per common share	9	Gross margin ratio
5	Day’s sales in inventory	10	Acid test ratio

No	Particular	Debit	Credit
a	Accumulated depreciation – building		\(400,000
b	Interest revenue		20,000
c	Net sales		2,640,000
d	Income tax expenses	\)?
e	Loss on hurricane damage	48,000
f	Accumulated depreciation – equipment		220,000
g	Other operating expenses	328,000
h	Depreciation expenses – equipment	100,000
i	Loss from settlement of lawsuit	36,000
j	Gain from settlement of lawsuit		68,000
k	Loss on sale of equipment	24,000
l	Loss from operating a discontinued segment (pre-tax)	120,000
m	Depreciation expenses – Building	156,000
n	Correction of overstatement of prior year’s expenses (pretax)		48,000
o	Cost of goods sold	1,040,000
p	Loss on sale of discontinued segment’s assets (pretax)	180,000
q	Account payable		132,000