Comparative balance sheets for Farinet Company for the past two years are as follows:

Required
1. Using the format in Example 13-4, prepare common-size comparative balance sheets for the two years for Farinet Company.
2. What observations can you make about changes in the relative composition of Farinet's accounts from the common-size balance sheets? List at least five observations.
3. Using the format in Example 13-1, prepare comparative balance sheets for Farinet Company, including columns for the dollars and for the percentage increase or decrease in each item on
the statement.
4. Identify the five items on the balance sheet that experienced the largest change from one year to the next. For each of these items, explain where you would look to find additional information about the change.

December 31 2012 2011 Cash Accounts receivable Inventory Prepaid rent $ 16,000 20,000 30,000 50,000 12,000 $ 104,000 $112,000 150,000 $150,000 600,000 (60,000) $ 820,000 $690,000 $ 924,000 $802,000 S 24,000 20,000 10,000 50,000 100,000 80,000 150,000 $200,000 $ 400,000 $300,000 222,000 $ 674,000 $522,000 Total liabilities and stockholders' equity S924,000 S802,000 40,000 30,000 18,000 Total current assets Land Plant and equipment Accumulated depreciation 800,000 (130,000) Total long-term assets Total assets Accounts payable Income taxes payable Short-term notes payable 6,000 70,000 Total current liabilities Bonds payable Common stock Retained earnings 274,000 Total stockholders' equity