1. Use the following financial statements from the Case Study on Associated Industries to calculate the change. Associated Industries Balance Sheet Assets Current Assets Cash Inventory Accounts Receivable 2016 2017 540,500 $12,652 $54,000 $111,500 $132.250 $151,250 Total Current Assets $227,250 $275,902 Plant, Property and Equipment $45,000 $45,000 Less: Accumulated Depreciation $2.250 Total Plant, Property and Equipment $42.250 $40,500 Total Assets $270,000 $316,402 Liabilities and Owners' Equity Liabilities Current Liabilities Accounts Payable $40.500 $77.500 Total Current Liabilities $40,500 $77,580 Long-Term Liabilities Bank Loan Payable $135,000 $135.000 Total Long-Term Liabilities $135,000 $135,000 Total Liabilities $175,500 $212,580 Owners' Equity Owners' Investment Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity Associated Industries $90,000 $90,000 $4.500 $13.822 194,500 $101,522 $270,000 $316,402 Profit and Loss Statement Sales Activities Revenue Cost of Goods Sold 2016 2017 $375,000 $306,250 $163,944 Gross Profit Operating Expenses Selling Expenses Advertising $15,000 $20,000 Sales Staff Salary $75,000 $77,250 General and Administrative Rent $22,500 $22,500 $11,250 $11,588 Owners Salary $15,750 $15,750 Accounting, Payroll and Legal $7,500 $7,725 Depreciation $2.250 $2.250 Total Operating Expenses $149.250 $152.063 Operating Profit $14.694 $11.800 Interest 30 30 Profit Before Taxes $14,494 $11,000 Income Taxes 13.06 $2.428 Net Profit $11.608 $9.322 2. Now that you know the relationships with the various accounts, give one example of Total Assets Liabilities and Owners' Equity Liabilities Current Liabilities $270,000 $316,402 Accounts Payable $40,500 $77,580 Total Current Liabilities $40,500 $77,580 Long-Term Liabilities Bank Loan Payable $135,000 $135,000 Total Long-Term Liabilities $135,000 $135,000 Total Liabilities $175,500 $212,580 Owners' Equity Owners' Investment $90,000 $90,000 $4,500 $13,822 Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity Associated Industries $94,500 $103,822 $270,000 $316,402 Profit and Loss Statement Sales Activities Revenue Cost of Goods Sold Gross Profit Operating Expenses 2016 2017 $375,000 $386,250 $211.056 $217,388 $163,944 $168,862 Selling Expenses Advertising $15,000 $20,000 Sales Staff Salary $75,000 $77,250 General and Administrative Rent $22,500 $22,500 Utilities $11,250 $11,588 Owners' Salary $15,750 $15,750 Accounting, Payroll and Legal $7,500 $7,725 Depreciation $2,250 $2,250 Total Operating Expenses $149,250 $157,063 Operating Profit $14,694 $11,800 Interest 50 50 Profit Before Taxes $14,694 $11,000 Income Taxes $3.006 $2.478 Net Profit $11.608 $9.322 2. Now that you know the relationships with the various accounts, give one example of how the percentage change analysis can assist you in quickly identifying issues. Use the data you calculated from the financial statements above to discuss what Associated Industries should be concerned with and monitor moving forward. For example you might look at the following accounts and make an analysis based on their % change and their relationship within the company: (You are not limited to the following examples) Accounts receivable % change vs Accounts payable change Gross Profit % change vs Operational Profit % change Total current assets change vs total current liabilities % change Total Debt % change vs Total Owners Equity % change