Express the Following Balance Sheets for Safety Company in Common-Size

question 164

Essay

Express the following balance sheets for Safety Company in common-size percentages.
Safety Company
Balance Sheets
For the years ended December 31
$\begin{array}{|l|r|r|}\hline & \text { Year 2 } & \text { Year 1 } \\\hline \text { Assets } & & \\\hline \text { Cash } & \$ 43,000 & \$ 22,000 \\\hline \text { Accounts receivable } & 38,000 & 42,000 \\\hline \text { Merchandise inventory } & 61,000 & 52,000 \\\hline \text { Prepaid insurance } & 6,000 & 9,000 \\\hline \text { Long-term investments } & 49,000 & 20,000 \\\hline \text { Plant assets (net) } & 218,000 & 218,000 \\\hline \text { Total assets } & \$ 415,000 & \$ 363,000 \\\hline\\\hline \text { Liabilities and Equity } & & \\\hline \text { Current liabilities } & \$ 62,000 & \$ 75,000 \\\hline \text { Long-term liabilities } & 45,000 & 36,000 \\\hline \text { Common stock } & 150,000 & 150,000 \\\hline \text { Retained earnings } & 158,000 & 102,000 \\\hline \text { Total liabilities and equity } & \$ 415,000 & \$ 363,000 \\\hline\end{array}$

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Definitions:

Loss Carryback

A tax provision that allows businesses to apply a net operating loss to past tax years in order to receive a tax refund.

Income Before Taxes

The amount of income a company generates before accounting for income taxes, often used to assess the profitability of a company excluding tax expenses.

Income Tax Rate

The proportion of an entity's income that is subjected to taxation.

Deferred Tax Note

An explanatory note in financial statements detailing the amounts and causes of deferred tax assets and liabilities.