Question

Bethesda Mining Company reports the following balance sheet information for 2021 and 2022. Prepare the 2021 and 2022 common-size balance sheets for Bethesda Mining.

Answer 1

To prepare the common-size balance sheets for Bethesda Mining, divide each item on the balance sheet by the total assets and write down the common-size percentage for each item. Repeat the process for the following year.

Step-by-step explanation:

2021 Common-Size Balance Sheet

To calculate the common-size balance sheet for Bethesda Mining in 2021, divide each item on the balance sheet by the total assets. This will give you the proportionate size of each item relative to the company's total assets. Here's an example:

1. Compute the total assets for 2021.
2. Divide each item on the balance sheet by the total assets to get the common-size percentage.
3. Write down the common-size percentage for each item.

2022 Common-Size Balance Sheet

Repeat the same steps for the 2022 balance sheet to calculate the common-size percentages for that year.