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 company's financial condition and performance. Cute Camel Woodcraft Company 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. Cute Camel Woodcraft Company Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $6,457 Accounts payable $0 $0 Accounts receivable 2,953 2,363 Accruals 410 0 Inventories 8,662 6,930 Notes payable 2,324 2,187 Total current assets $19,687 $15,750 Total current liabilities $2,187 Net fixed assets: Long-term debt 8,203 6,563 Net plant and equipment $19,250 Total debt $10,937 $8,750 Common equity: Common stock 21,328 17,063 Retained earnings 9,187 Total common equity $32,813 $26,250 $35,000 Total assets $43,750 $35,000 Total liabilities and equity $43,750 Given the information in the preceding balance sheet-and assuming that Cute Camel Woodcraft Company 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:Cute Camel's net collection of inventory items increased by more than the firm sold between Years 1 and 2. This statement is because: Total inventories of raw materials, work-in-process, and final goods decreased by $1,732 million between Year 1 and Year 2 O Total inventories of raw materials, work-in-process, and final goods increased from $6,930 million to $8,662 million between Year 1 and Year 2 The accruals balance decreased by $410 million between Years 1 and 2 Statement #2: In Year 2, Cute Camel Woodcraft Company was profitable. This statement is because: O Cute Camel's retained earnings account increased between the end of Years 1 and 2 O Cute Camel's total assets increased between Years 1 and 2 The cash and equivalents account increased between Years 1 and 2 Statement #3: If Cute Camel ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders. This statement is v , because: O Debtholders and preferred shareholders are considered residual investors O Debtholders are treated as residual investors O Common shareholders are treated as residual investors