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 sheets for Cute Camel Woodcraft Company for the years ending December 31, Year 2 and 1, respectively. Cute Camel Woodcraft Company Balance Sheet For the Year ended December 31 Year 2 Year 1 Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents Accounts payable $0 $0 $36,900 $13,500 Accounts receivable $16,875 Accruals $2,344 $0 Inventories $49,500 $39,600 Notes payable $13,281 $12,500 Total current assets $112,500 $90,000 Total current liabilities $12,500 $37,500 Net fixed assets: Long-term debt $46,875 $62,500 Net plant and equipment $110,000 Total debt $50,000 Common equity: Common stock $121,875 $97,500 $52,500 Retained earnings Total common equity Total liabilities and equity $ 187,500 $150,000 Total assets $250,000 $200,000 $250,000 $200,000 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 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 Cute Camel's total current asset balance decreased from $112,500 to $90,000 between Year 1 and Year 2. O Cute Camel's total current asset balance actually increased from $90,000 to $112,500 between Year 1 and Year 2. O Cute Camel's total current liabilities balance decreased by $22,500 between Year 1 and Year 2. O Cute Camel's total current liabilities balance increased from $13,500 to $16,875 between Year 1 and Year 2. This statement is , because: O Cute C false current asset balan O Cute c accurate current asset balan Statement #2: In Year 2, Cute Camel Woodcraft Company was profitable. This statement is , because: O The cash and equivalents account increased between Years 1 and 2. O Cute Camel's total assets increased between Years 1 and 2. O Cute Camel's retained earnings account increased between the end of Years 1 and 2. This statement is , because: O The cas incorrect Valents account O Cute | true assets increased Statement #3: One way to interpret the change in Cute Camel's accounts receivable balance from Year 1 to Year 2 is that more customers purchased new items on credit rather than paying off existing credit accounts. This statement is , because: O The decrease from $16,875 to $13,500 implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit. O The $3,375 increase in accounts receivable means either that Year 1's existing credit customers are not paying off their owed balances and new or existing customers are making additional purchases on credit, or that Year 1's credit customers have repaid their owed balances and Year 2 credit sales have exceeded Year 1's credit sales. O The change from $39,600 to $49,500 reflects a net accumulation of new credit sales. Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Cute Camel Woodcraft Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? This statement is , because: O The de correct $16,875 to $13,500 im es than are buying on cr receiva incorrect Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Cute Camel Woodcraft Company's balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? O The company's debts are listed in the order in which they are to be repaid. O The company's debts should be listed in order of their liquidity. O The company's debts should be listed from those carrying the largest balance to those with the smallest balance