The balance sheet data of Randolph Company for two recent years appears below: Assets: Year 2 Year 1 Current assets $445 $280 Plant assets 680 520 Total assets $1,125 $800 Liabilities and stockholders' equity: Current liabilities $285 $120 Long-term debt 255 160 Common stock 325 320 Retained earnings 260 200 Total liabilities and stockholders' equity $1,125 $800 Required: Question Content Area a. Using horizontal analysis, show the percentage change for each balance sheet item using Year 1 as a base year. If required, round percentage to one decimal place. If required, use the minus sign to indicate decreases in amounts and percents (negative values). Randolph CompanyComparative Balance SheetFor the Years Ended December 31, Year 2 and Year 1 Assets Year 2 Year 1 Increase/ Decrease Amount Increase/ Decrease Percentage Current assets $445 $280 $fill in the blank 993da1faf023f83_1 fill in the blank 993da1faf023f83_2% Plant assets 680 520 fill in the blank 993da1faf023f83_3 fill in the blank 993da1faf023f83_4 Total assets $1,125 $800 $fill in the blank 993da1faf023f83_5 fill in the blank 993da1faf023f83_6% Liabilities & stockholders' equity Current liabilities $285 $120 $fill in the blank 993da1faf023f83_7 fill in the blank 993da1faf023f83_8% Long-term debt 255 160 fill in the blank 993da1faf023f83_9 fill in the blank 993da1faf023f83_10 Common stock 325 320 fill in the blank 993da1faf023f83_11 fill in the blank 993da1faf023f83_12 Retained earnings 260 200 fill in the blank 993da1faf023f83_13 fill in the blank 993da1faf023f83_14 Total liabilities and stockholders' equity $1,125 $800 $fill in the blank 993da1faf023f83_15 fill in the blank 993da1faf023f83_16% Question Content Area b. Using vertical analysis, prepare a comparative balance sheet. If required, round your answers to one decimal place. Randolph CompanyComparative Balance SheetFor the Years Ended December 31, Year 2 and Year 1 Assets Year 2 Amount Year 2 Percent Year 1 Amount Year 1 Percent Current assets $445 fill in the blank f6cf25f95fdcfed_1% $280 fill in the blank f6cf25f95fdcfed_2% Plant assets 680 fill in the blank f6cf25f95fdcfed_3 520 fill in the blank f6cf25f95fdcfed_4 Total assets $1,125 fill in the blank f6cf25f95fdcfed_5% $800 fill in the blank f6cf25f95fdcfed_6% Liabilities and stockholders' equity Current liabilities $285 fill in the blank f6cf25f95fdcfed_7% $120 fill in the blank f6cf25f95fdcfed_8% Long-term debt 255 fill in the blank f6cf25f95fdcfed_9 160 fill in the blank f6cf25f95fdcfed_10 Common stock 325 fill in the blank f6cf25f95fdcfed_11 320 fill in the blank f6cf25f95fdcfed_12 Retained earnings 260 fill in the blank f6cf25f95fdcfed_13 200 fill in the blank f6cf25f95fdcfed_14 Total liabilities and stockholders' equity $1,125 fill in the blank f6cf25f95fdcfed_15% $800 fill in the blank f6cf25f95fdcfed_16%
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The
| Assets: | Year 2 | Year 1 |
| Current assets | $445 | $280 |
| Plant assets | 680 | 520 |
| Total assets | $1,125 | $800 |
| Liabilities and |
||
| Current liabilities | $285 | $120 |
| Long-term debt | 255 | 160 |
| Common stock | 325 | 320 |
| 260 | 200 | |
| Total liabilities and stockholders' equity | $1,125 | $800 |
Required:
Question Content Area
a. Using horizontal analysis, show the percentage change for each balance sheet item using Year 1 as a base year. If required, round percentage to one decimal place. If required, use the minus sign to indicate decreases in amounts and percents (negative values).
| Assets | Year 2 | Year 1 | Increase/ Decrease Amount |
Increase/ Decrease Percentage |
| Current assets | $445 | $280 | $fill in the blank 993da1faf023f83_1 | fill in the blank 993da1faf023f83_2% |
| Plant assets | 680 | 520 | fill in the blank 993da1faf023f83_3 | fill in the blank 993da1faf023f83_4 |
| Total assets | $1,125 | $800 | $fill in the blank 993da1faf023f83_5 | fill in the blank 993da1faf023f83_6% |
| Liabilities & stockholders' equity | ||||
| Current liabilities | $285 | $120 | $fill in the blank 993da1faf023f83_7 | fill in the blank 993da1faf023f83_8% |
| Long-term debt | 255 | 160 | fill in the blank 993da1faf023f83_9 | fill in the blank 993da1faf023f83_10 |
| Common stock | 325 | 320 | fill in the blank 993da1faf023f83_11 | fill in the blank 993da1faf023f83_12 |
| Retained earnings | 260 | 200 | fill in the blank 993da1faf023f83_13 | fill in the blank 993da1faf023f83_14 |
| Total liabilities and stockholders' equity | $1,125 | $800 | $fill in the blank 993da1faf023f83_15 | fill in the blank 993da1faf023f83_16% |
Question Content Area
b. Using vertical analysis, prepare a comparative balance sheet. If required, round your answers to one decimal place.
| Assets | Year 2 Amount |
Year 2 Percent |
Year 1 Amount |
Year 1 Percent |
| Current assets | $445 | fill in the blank f6cf25f95fdcfed_1% | $280 | fill in the blank f6cf25f95fdcfed_2% |
| Plant assets | 680 | fill in the blank f6cf25f95fdcfed_3 | 520 | fill in the blank f6cf25f95fdcfed_4 |
| Total assets | $1,125 | fill in the blank f6cf25f95fdcfed_5% | $800 | fill in the blank f6cf25f95fdcfed_6% |
| Liabilities and stockholders' equity | ||||
| Current liabilities | $285 | fill in the blank f6cf25f95fdcfed_7% | $120 | fill in the blank f6cf25f95fdcfed_8% |
| Long-term debt | 255 | fill in the blank f6cf25f95fdcfed_9 | 160 | fill in the blank f6cf25f95fdcfed_10 |
| Common stock | 325 | fill in the blank f6cf25f95fdcfed_11 | 320 | fill in the blank f6cf25f95fdcfed_12 |
| Retained earnings | 260 | fill in the blank f6cf25f95fdcfed_13 | 200 | fill in the blank f6cf25f95fdcfed_14 |
| Total liabilities and stockholders' equity | $1,125 | fill in the blank f6cf25f95fdcfed_15% | $800 | fill in the blank f6cf25f95fdcfed_16% |
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