Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ham Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing Inc. has 50 million shares of common stock otstanding-read each of
Ham
Given the information in the preceding balance sheet-and assuming that Blue Hamster Manufacturing Inc. has 50 million shares of common stock otstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet. Statement \# 1: Blue Hamster'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: Blue Hamster's total current asset balance actually increased from $13,500 million to $16,875 million between Year 1 and Year 2 Blue Hamster's total current liabilities balance increased from $2,025 million to $2,531 million between Year 1 and Year 2 Blue Hamster's total current liabilities balance decreased by $3,375 million between Year 1 and Year 2 Statement \#2: On December 31 of Year 2, Blue Hamster Manufacturing Inc. had $6,919 million of actual money that it could have spent immediately. This statement is , because: The funds recorded in Blue Hamster's cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately Blue Hamster's Year 2 cash and equivalents balance is $17,415 The funds recorded in Blue Hamster's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately Statement \#3: One way to interpret the change in Blue Hamster'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: The $506 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 The change from $5,940 million to $7,425 million reflects a net accumulation of new credit sales The decrease from $2,531 million to $2,025 million implies a net decrease in accounts receivable and that more customers are paying off their receivables balances than are buying on credit Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Blue Hamster Manufacturing Inc.'s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? The company's debts should be listed from those carrying the largest balance to those with the smallest balance. The company's debts are listed in the order in which they are to be repaid. The company's debts should be listed in order of their liquidity
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started