Answer:
A. Total assets $31,250 $25,000
Total abilities and equity $31,250 $25,000
B. Statement 1 is FALSE
Statement 2 is TRUE
Explanation:
A . Using the information given to complete the balance sheet
Cold Goose Metal Works Inc Balance Sheet For Year Ending December 31 (Millions of Dollars)
Year 1 Year 2
ASSETS
Current assets:
Cash and equivalents
$5,766 $4,612
(14,062 – 6,187-2,109 = $5766)
Accounts receivable
2,109 1,688
Inventories
6,187 4,950
Total current assets
$14,062 $11,250
Net fixed assets:
Net plant and equipment
$17,188 $13750
( 31,250-14,062 = $17,188)
Total assets $31,250 $25,000
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$0 $0
Accruals
293 0
Notes payable
1,660 1,562
Total current abilities
$1,953 $1,562
(0+293+1,660 = $1,953)
Long-term debt
5,859 4,688
Total debt
$7,812 $6,250
Common equity
Common stock
15,235 12,188
Retained earnings
$8,203 6,562
(23,438-15,235 = $8,203)
Total abilities and equity $31,250 $25,000
Net Plant and Equipment= 31250-14062
Net Plant and Equipment = $17188
Cash and Equivalents = 14062 – 6187-2109
Cash and Equivalents= $5766
Total Current liabilities = 0+293+1660
Total Current liabilities = $1953
Retained earnings = 23438-15235
Retained earnings= $8203
B. To identify the selection that best interprets the information conveyed by the balance sheet.
Based on the information given STATEMENT 1 is FALSE reason been that Cold Goose’s total current asset balance increased from the amount of $11,250 million to the amount of $14,062 million between Year 1 and Year 2.
Based on the information given STATEMENT 2 is TRUE reason been that their was increased in retained earnings account between the end of Years 1 and year 2.
