Question

Russell's Hardware has inventory of $218,000, equity of $421,800, total assets of $647,700, and sales of $587,200. What is the common-size percentage for the inventory account?

A. 26.81 percent
B. 33.66 percent
C. 37.12 percent
D. 49.09 percent
E. 51.68 percent

Answer 1

B. 33.66 percent

Step-by-step explanation:

The common-size analysis involves comparing income statement items to revenue while balance sheet items are related to total assets, hence, the inventory account is a balance sheet item that would need to compared to total assets.

Common-size percentage= inventory/total assets.

inventory=$218,000

total assets=$647,700

Common-size percentage=$218,000/$647,700

Common-size percentage=33.66%