Express the items in common-size percents. Note: Round your percentage answers to one decimal place.

Understand the Problem

The question requires calculating common-size percentages for various financial items (cash, accounts receivable, equipment, net, land, and total assets) based on their current and prior year amounts. The user needs to express these as percentages of total assets for each year, rounding answers to one decimal place.

Answer

Current Year: Cash $4.6\%$, Accounts Receivable $26.8\%$, Equipment $25.1\%$, Land $43.6\%$; Prior Year: Cash $8.2\%$, Accounts Receivable $15.8\%$, Equipment $31.1\%$, Land $45.3\%$.

Steps to Solve

Identify Total Assets for Both Years

Determine the total assets for the current year and the prior year.

Current Year Total Assets: $223,700
Prior Year Total Assets: $159,000

Calculate Common-Size Percentages for Current Year

For each item, divide the amount by total assets for the current year, and then multiply by 100 for the percentage.

Cash: $$ \frac{10,200}{223,700} \times 100 \approx 4.6% $$
Accounts Receivable: $$ \frac{60,000}{223,700} \times 100 \approx 26.8% $$
Equipment, net: $$ \frac{56,000}{223,700} \times 100 \approx 25.1% $$
Land: $$ \frac{97,500}{223,700} \times 100 \approx 43.6% $$

Calculate Common-Size Percentages for Prior Year

Perform the same calculation for each item using the prior year's total assets.

Cash: $$ \frac{13,000}{159,000} \times 100 \approx 8.2% $$
Accounts Receivable: $$ \frac{25,200}{159,000} \times 100 \approx 15.8% $$
Equipment, net: $$ \frac{49,600}{159,000} \times 100 \approx 31.1% $$
Land: $$ \frac{72,000}{159,000} \times 100 \approx 45.3% $$

Round Answers to One Decimal Place

Make sure to round each calculated percentage to one decimal place as required.

Current Year Percentages:

Cash: $4.6%$
Accounts Receivable: $26.8%$
Equipment, net: $25.1%$
Land: $43.6%$
Total Assets: $100.0%$

Prior Year Percentages:

Cash: $8.2%$
Accounts Receivable: $15.8%$
Equipment, net: $31.1%$
Land: $45.3%$
Total Assets: $100.0%$

More Information

Common-size financial statements allow for easy comparison between periods by expressing items as a percentage of total assets, facilitating analysis of changes in asset structure.

Tips

Forgetting to round the final values: Always remember to round to the instructed decimal places.
Using incorrect total assets: Ensure the total asset value used matches the year being calculated to avoid errors.

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