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. 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. Year 2 Year 1 $0 176 996 $0 0 937 Cold Goose Metal Works Inc. Balance Sheet for Year Ending December 31 (Millions of dollars) Year 2 Year 1 Assets Liabilities and equity Current assets: Current liabilities: Cash and equivalents $2,767 Accounts payable Accounts receivable 1,266 1,013 Accruals Inventories 3,712 2,970 Notes payable Total current assets $8,437 $6,750 Total current liabilities Net fixed assets: Long-term debt Net plant and equipment $8,250 Total debt Common equity: Common stock Retained earnings Total common equity Total assets $18,750 $15,000 Total liabilities and equity $937 3,515 $4,687 2,813 $3,750 9,141 7,313 3,937 $11,250 $15,000 $14,063 $18,750 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 net collection of inventory items increased by more than the firm sold between MacBook Given the information in the preceding balance sheet-and assuming that Cold Goose Metal Woris Inc. has 50 milion 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 net collection of inventory Items increased by more than the firm sold between Years 1 and 2 This statement is because: The accounts receivable balance increased by $253 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods increased from $2,970 million to $3,712 million between Year 1 and Year 2 The accruals balance decreased by $176 million between Years 1 and 2 Statement #2: Over the past two years, Cold Goose Metal Works Inc. has reled more on the use of short-term debt than on long-term debt financing This statement is because O Cold Goose's total notes payable increased by $59 million, while its common stock account increased by $1,828 million O Cold Goose's total current liabilities increased by $235 million, while its use of long-term debt increased by $702 milion Cold Goose's total current liabilities decreased by $235 million, while its long-term debt account decreased by $702 million Statement #3: If Cold Goose ever goes bankrupt, its common stockholders will be paid of first, thens debtholders and preferred stockholders This statement is because Debtholders and preferred shareholders are considered residual investors Common shareholders are treated as residual investors Debtholders are treated as residual investors 2 $ 4 3 % 5 & 7 8 9 Q W E R. T Y Cold Goose's total notes payable increased by $59 million, while its common stock account increased by $1,828 million Cold Goose's total current liabilities increased by $235 million, while its use of long-term debt increased by $702 million Cold Goose's total current liabilities decreased by $235 million, while its long-term debt account decreased by $702 million Statement #3: If Cold Goose ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders. This statement is because: Debtholders and preferred shareholders are considered residual investors Common shareholders are treated as residual Investors 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 us 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 should be listed in order of their liquidity. The company's debts are listed in the order in which they are to be repaid