Statement Analysis of Financial Position. The financial statements for XYZ Company for the years 20X1 and 20X2 are given below.
XYZ Company Balance Sheet December 31, 20X1 and 20X2
20X2 20X1
ASSETS
Current assets
Cash $ 200 $ 500
Accounts receivable 600 300
Inventory 600 700
Total current assets $1,400 $1,150
Fixed assets
Plant and equipment $ 900 $ 700
Less: Accumulated depreciation (200) (150)
Net fixed assets $ 700 $ 550
Long-term investments $ 300 $ 400
Total assets $2,400 $2,100
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 800 $ 400
Taxes payable 50 100
Total current liabilities $ 850 $ 500
Bonds payable $ 150 $ 500
Stockholders’ equity
Capital stock $ 800 $ 700
Retained earnings 600 400
Total stockholders’ equity $1,400 $1,100
Total liabilities and
stockholders’ equity $2,400 $2,100
XYZ Company Income Statement For the Years Ended December 31, 20X2
Sales $900
Cost of goods sold 200
Gross margin $700
Operating expenses
Selling expense $100
Administrative expense 150
Depreciation expense 50
Total expenses 300
Net income $400
XYZ Company Statement of Retained Earnings For the Year Ended December 31, 20X2
Retained earnings, December 31, 20X1 $400
Add: Net income 400
$800
Deduct: Dividends paid 200
Retained earnings, December 31, 20X2 $600
Prepare (a) the statement of changes in financial position on a net working capital basis, and (b) the statement of changes in financial position on a cash basis with percentages. (c) Briefly summarize your findings.