Solve the problem. Express answers as a percent rounded to the nearest tenth.
20) Complete a vertical analysis on the balance sheet for Jake's Janitorial Service for December 31 of last year. The
company assets are cash $20,000, accounts receivable $48,000, merchandise inventory $89,000, and equipment
$82,000. The liabilities are accounts payable $13,000, wages payable $16,000, and mortgage note payable
$77,000. The owner's capital is $133,000.
complete a vertical analysis on the balance sheet for jake's janitorial service for december 31 of last year...
To complete a vertical analysis on the balance sheet, we need to express each item as a percentage of the total assets or total liabilities and owner's equity.
First, let's calculate the total assets:
Total Assets = Cash + Accounts Receivable + Merchandise Inventory + Equipment
Total Assets = $20,000 + $48,000 + $89,000 + $82,000
Total Assets = $239,000
Next, let's calculate the total liabilities and owner's equity:
Total Liabilities and Owner's Equity = Liabilities + Owner's Capital
Total Liabilities and Owner's Equity = Accounts Payable + Wages Payable + Mortgage Note Payable + Owner's Capital
Total Liabilities and Owner's Equity = $13,000 + $16,000 + $77,000 + $133,000
Total Liabilities and Owner's Equity = $239,000
Now, let's express each item as a percentage of the total assets:
Cash: (Cash / Total Assets) * 100%
Cash: ($20,000 / $239,000) * 100% ≈ 8.4%
Accounts Receivable: (Accounts Receivable / Total Assets) * 100%
Accounts Receivable: ($48,000 / $239,000) * 100% ≈ 20.1%
Merchandise Inventory: (Merchandise Inventory / Total Assets) * 100%
Merchandise Inventory: ($89,000 / $239,000) * 100% ≈ 37.2%
Equipment: (Equipment / Total Assets) * 100%
Equipment: ($82,000 / $239,000) * 100% ≈ 34.3%
Now, let's express each liability as a percentage of the total liabilities and owner's equity:
Accounts Payable: (Accounts Payable / Total Liabilities and Owner's Equity) * 100%
Accounts Payable: ($13,000 / $239,000) * 100% ≈ 5.4%
Wages Payable: (Wages Payable / Total Liabilities and Owner's Equity) * 100%
Wages Payable: ($16,000 / $239,000) * 100% ≈ 6.7%
Mortgage Note Payable: (Mortgage Note Payable / Total Liabilities and Owner's Equity) * 100%
Mortgage Note Payable: ($77,000 / $239,000) * 100% ≈ 32.2%
Lastly, let's express the owner's capital as a percentage of the total liabilities and owner's equity:
Owner's Capital: (Owner's Capital / Total Liabilities and Owner's Equity) * 100%
Owner's Capital: ($133,000 / $239,000) * 100% ≈ 55.6%
Therefore, the vertical analysis of Jake's Janitorial Service's balance sheet for December 31 of last year would look as follows:
Assets:
- Cash: 8.4%
- Accounts Receivable: 20.1%
- Merchandise Inventory: 37.2%
- Equipment: 34.3%
Liabilities:
- Accounts Payable: 5.4%
- Wages Payable: 6.7%
- Mortgage Note Payable: 32.2%
Owner's Equity: 55.6%