2. Balance sheet Aa The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance sheet and other financial statements to make several interpretations regarding the company's financial condition and performance. Cold Goose Metal Works Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheet. Cold Goose Metal Works Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Current assets: Cash and equivalents Accounts receivable $0 $0 Liabilities and equity Current liabilities: Accounts payable Accruals Notes payable Total current liabilities 469 0 $7,380 2,700 7,920 $18,000 3,375 9,900 $22,500 Inventories 2,656 2,500 $2,500 cur assets Net fixed assets: Long-term debt 9,375 $12,500 7,500 $10,000 Net plant and equipment $22,000 24,375 Total debt Common equity: Common stock Retained earnings Total common equity Total liabilities and equity 19,500 10,500 $30,000 $40,000 $37,500 $50,000 Total assets $50,000 $40,000 Given the information in the preceding balance sheet-and assuming that Cold Goose Metal Works Inc. has 50 million shares of common stock outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet. Statement #1: Cold Goose's pool of relatively liquid assets, which are available to support the company's current and future sales, decreased from Year 1 to Year 2. This statement is , because: O Cold Goose's total current asset balance actually increased from $18,000 million to $22,500 million between Year 1 and Year 2 O Cold Goose's total current liabilities balance decreased by $4,500 million between Year 1 and Year 2 O Cold Goose's total current liabilities balance increased from $2,700 million to $3,375 million between Year 1 and Year 2 Statement #2: On December 31 of Year 2, Cold Goose Metal Works Inc. had $9,225 million of actual money that it could have spent immediately. This statement is , because: O Cold Goose's Year 2 cash and equivalents balance is $23,220 The funds recorded in Cold Goose's cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately The funds recorded in Cold Goose's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately Statement #3: The book value of one of Cold Goose's fixed assets is calculated as the original cost of the asset minus its annual depreciation expense. This statement is , because: An asset's net book value is calculated by subtracting its annual depreciation expense from its total historic and installation costs An asset's net book value is calculated by subtracting its accumulated depreciation expense from its total historic and installation costs An asset's net book value is calculated by adding its annual depreciation expense to its total historic and installation costs Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remains the same, then the cash and equivalents item on the current balance sheet is likely to if the firm buys a new plant and equipment at a cost of $1 million with liquid capital. decrease remain the same increase Statement #1: Cold Goose's pool of relatively liquid assets, w current and future sales, decreased from Year 1 to Year 2. This statement is because: false Cold Goose accurate nt asset balance actually increas between Year 1 and Year 2