Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Kepler Company Comparative Balance Sheets 1 This Year Last Year 2 Assets 3 Current assets: 4 Cash $50,000.00 $100,000.00 5 Accounts Receivable, net 300,000.00 150,000.00 6 Inventory 600,000.00 400,000.00 7 Prepaid expenses 25,000.00 30,000.00 8 Total current assets $975,000.00 $680,000.00 9 Property and equipment, net 125,000.00 150,000.00 10 Total assets $1,100,000.00 $830,000.00 11 Liabilities and Stockholders Equity 12 Current liabilities: 13 Accounts payable $400,000.00 $290,000.00 14 Short-term notes payable 200,000.00 60,000.00 15 Total current liabilities $600,000.00 $350,000.00 16 Long-term bonds payable, 12% 100,000.00 150,000.00 17 Total liabilities $700,000.00 $500,000.00 18 Stockholders equity: 19 Common stock (100,000 shares) 200,000.00 200,000.00 20 Retained earnings 200,000.00 130,000.00 21 Total liabilities and stockholders equity $1,100,000.00 $830,000.00 Kepler Company Comparative Income Statements 1 This Year Last Year 2 Sales $950,000.00 $900,000.00 3 Less: Cost of goods sold (500,000.00) (490,000.00) 4 Gross margin $450,000.00 $410,000.00 5 Less operating expenses: 6 Selling and Administrative expenses (275,000.00) (260,000.00) 7 Operating income $175,000.00 $150,000.00 8 Less: 9 Interest expense (12,000.00) (18,000.00) 10 Net income before taxes $163,000.00 $132,000.00 11 Less: 12 Income taxes (65,200.00) (52,800.00) 13 Net income after taxes $97,800.00 $79,200.00 14 Less: 15 Dividends (27,800.00) (19,200.00) 16 Net income, retained $70,000.00 $60,000.00 Required: 1. Compute the percentage change for each item on the following financial statements: A. balance sheet B. income statement 2. CONCEPTUAL CONNECTION Comment on any significant trends.