Cold Goose Metal Works Inc. is a hypothetical company. Suppose it has the following balance sheet items reported at the 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 Liabilities and equity Current assets: Current liabilities: Cash and equivalents $1,845 Accounts payable $0 $0 Accounts receivable 844 675 Accruals 117 0 Inventories 2,475 1,980 Notes payable 664 625 Total current assets $5,625 $4,500 Total current liabilities $625 Net fixed assets: Long-term debt 2,344 1,875 Net plant and equipment $5,500 Total debt $3,125 $2,500 Common equity: Common stock 6,094 4,875 Retained earnings 2,625 Total common equity $9,375 $7,500 Total assets $12,500 $10,000 Total liabilities and equity $12,500 $10,000 Given the information in the preceding balance sheet-and assuming that Cold Goose Metal Works Inc. has 50 million sha outstanding-read each of the following statements, then identify the selection that best interprets the information conve 03: Assignment - Financial Statements, Cash Flow, and Taxes his statement is because: Cold Goose's total current liabilities balance increased from $675 million to $844 million between Year 1 and Year 2 Cold Goose's total current asset balance actually increased from $4,500 million to $5,625 million between Year 1 and Year 2 Cold Goose's total current liabilities balance decreased by $1,125 million between Year 1 and Year 2 Statement #2: Over the past two years, Cold Goose Metal Works Inc. has relied more on the use of short-term debt than on long-ter debt financing This statement is because: Cold Goose's total notes payable increased by $39 million, while its common stock account increased by $1,219 million Cold Goose's total current liabilities decreased by $156 million, while its long-term debt account decreased by $469 million Cold Goose's total current liabilities increased by $156 million, while its use of long-term debt increased by $469 million 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 adding its annual depreciation expense to 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 Based on your understanding of the different items reported on the balance sheet and the information they provide, if everything else remain 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
