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. Green Caterpillar Garden Supplies 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. Green Caterpillar Garden Supplies Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Current assets: Cash and equivalents Accounts receivable Inventories Total current assets Liabilities and equity Current liabilities: Accounts payable Accruals Notes payable Total current liabilities $1,845 675 1,980 $4,500 844 2,475 $5,625 $0 117 664 625 $625 Net fixed assets: 2,344 1,875 $2,500 Net plant and equipment $5,500 $3,125 Long-term debt Total debt Common equity: Common stock Retained earnings Total common equity Total liabilities and equity 6,094 4,875 2,625 $7,500 $10,000 $9,375 $12,500 Total assets $12,500 $10,000 Statement #1: Green Caterpillar's net collection of inventory items increased by more than the firm sold between Years 1 and 2. This statement is , because: O The accounts receivable balance increased by $169 million between Years 1 and 2 The accruals balance decreased by $117 million between Years 1 and 2 Total inventories of raw materials, work-in-process, and final goods increased from $1,980 million to $2,475 million between Year 1 and Year 2 Statement #2: On December 31 of Year 2, Green Caterpillar Garden Supplies Inc. had $2,306 million of actual money that it could have spent immediately. This statement is , because: The funds recorded in Green Caterpillar's accounts receivable account represents funds that are either cash or can be converted into cash almost immediately O Green Caterpillar's Year 2 cash and equivalents balance is $5,805 The funds recorded in Green Caterpillar's cash and equivalents account represents funds that are either cash or can be converted into cash almost immediately Statement #3: The book value of one of Green Caterpillar's fixed assets is calculated as the original cost of the asset minus its annual depreciation expense. This statement is , because: O 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 costs An asset's net book value is calculated by subtracting its annual depreciation expense from its total historic and installation costs
