(((HIGHLIGHTED QUESTIONS)))) I need assistance with my Finance Homework
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 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 $5,766 $4,612 Accounts $0 $0 equivalents payable Accounts 2,109 1,688 Accruals 293 receivable Inventories 6,187 4,950 Notes payable 1,660 1,562 Total current $14,062 $11,250 Total current $1,953 $1,562 assets liabilities Net fixed Long-term 5,859 4,688 assets: debt Net plant and $17,188 $13,750 Total debt $7,812 $6,250 equipment Common equity: Common 15,235 12, 188 stock etained 8,203 6,562 earnings Total common $23,438 $18,750 equity Total assets $31,250 $25,000 Total liabilities $31,250 $25,000 and equity 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. Statement #1: Cold Goose'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. TRUE This statement is,because : A O Cold Goose's total current asset balance actually increased from $11,250 million to $14,062 million between Year 1 and Year 2 3 0 Cold Goose's total current liabilities balance decreased by $2,812 million between Year 1 and Year 2 C O Cold Goose's total current liabilities balance increased from $1,688 million to $2,109 million between Year 1 and Year 2 Statement #2: In Year 2, Cold Goose Metal Works Inc. was profitable. TRUE This statement is FALSE because: A O Cold Goose's total assets increased between Years 1 and 2 B O Cold Goose's retained earnings account increased between the end of Years 1 and 2 The cash and equivalents account increased between Years 1 and 2 Statement #3: If Cold Goose ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders. INCORRECT This statement is Correct because: A O Common shareholders are treated as residual investors B O Debtholders and preferred shareholders are considered residual investors C O Debtholders are treated as residual investors Based on your understanding of the different items reported on the balance sheet and the information they provide, which statement regarding Cold Goose Metal Works Inc.'s balance sheet is consistent with U.S. Generally Accepted Accounting Principles (GAAP)? A O The company's debts should be listed listed in order of their liquidity. B The comp debts are listed in the order in which they are to be repaid. CO The company's debts should be listed from those carrying the largest balance to those with the smallest balance
