2. Balance sheet

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 companys 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 sheets for Cold Goose Metal Works Inc. for the years ending December 31, Year 2 and 1, respectively.

Cold Goose Metal Works Inc. Balance Sheet For the Year ended December 31 Year 1 Year 2 Year 1 Assets Liabilities and equity Current liabilities: Current assets: Cash and equivalents $0 $0 Accounts receivable $110,700 $40,500 $118,800 $270,000 $50,625 $148,500 $337,500 Accounts payable Accruals Notes payable Total current liabilities $0 $7,031 $39,844 Inventories $37,500 Total current assets $37,500 $112,500 Net fixed assets: Net plant and equipment Long-term debt Total debt $140,625 $187,500 $330,000 $150,000 Common equity: $365,625 Common stock Retained earnings $292,500 $157,500 $450,000 $600,000 Total common equity Total liabilities and equity $562,500 $750,000 Total assets $750,000 $600,000 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