[The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory. Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity Current Year 1 Year Ago 2. Years Ago $ 35,625 62,500 $ 37,800 82,500 $ 31,800 89,500 112,500 10,700 278,500 $ 523,000 $ 129,900 98,500 9,375 255,000 $ 445,000 $ 75,250 50,200 54,000 5,000 230,500 $ 377,500 51,250 163,500 131,100 $ 523,000 101,500 163,500 104,750 83,500 163,500 79,250 $ 445,000 $ 377,500 1. Express the balance sheets in common-size percents. 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable? Required information SIMON COMPANY Common-Size Comparative Balance Sheets December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par Retained earnings 90 % % % % % % % % % Total liabilities and equity % % %