The financial statements for the Bao Corporation are given below:
Bao Corporation Comparative Balance Sheets December 31, 2015, and 2014
2015 2014
Current assets:
Cash $ 1,900 $ 1,300
Accounts receivable net 9,100 7,300
Inventory 11,300 9,100
Prepaid expenses 560 250
Total current assets 22,860 17,950
Property and equipment:
Land 86,000 86,000
Buildings and equipment, net 48,600 52,000
Total property and equipment 134,600 138,000
Total assets $157,460 $155,950
Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable $ 17,600 $ 21,000
Accrued expenses 1,620 4,430
Notes payable, short term 540 220
Total current liabilities 19,760 25,650
Long-term liabilities:
Bonds payable 5,300 5,300
Notes payable 34,400 35,000
Total liabilities 59,460 65,950
Stockholder's equity:
Common stock 11,000 11,000
Additional paid-in capital 19,000 19,000
Total paid-in capital 30,000 30,000
Retained earnings 68,000 60,000
Total stockholder's equity 98,000 90,000
Total liabilities and stockholder's equity $157,460 $155,950
Bao Corporation Comparative Income Statement
For the Year Ended December 31, 2015, and 2014
2015 2014
Sales $130,000 $111,000
Cost of goods sold 67,000 61,000
Gross margin 63,000 50,000
Operating expenses:
Selling expenses 24,500 20,000
Administrative expenses 17,500 14,600
Total operating expenses 42,000 34,600
Income from operations 21,000 15,400
Interest expense 5,600 4,700
Income before taxes 15,400 10,700
Less income taxes 6,160 4,280
Net income $ 9,240 $ 6,420
Required
a. Present the balance sheet with each account balance as a percent of total assets.
b. Present the income statement with each balance as a percent of sales.
c. Comment on the results of any significant findings.
d. What types of issues does the company seem to be facing?
e. What suggestions do you have for the Bao Corporation?