Blue Hamster Manufacturing Inc. is a hypothetical company. 2. Balance sheet Aa A

Question

Blue Hamster Manufacturing Inc. is a hypothetical company.

2. Balance sheet Aa Aa 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 Blue Hamster Manufacturing 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. Blue Hamster Manufacturing Inc. Balance Sheet for Year Ending December 31 (Millions of Dollars) Year 2 Year 1 Year 2 Year 1 Assets Current assets Liabilities and equity Current liabilities: Cash and equivalents Accounts receivable Inventories $5,535 Accounts payable $0 352 1,992 $0 2,531 7,425 $16,875 2,025 5,940 $13,500 Accruals Notes payable 1,875 $1,875 5,625 $7,500 Total current assets Total current liabilities Net fixed assets: Long-term debt 7,031 $9,375 Net plant and equipment $16,500 Total debt Common equity: Common stock 14,625 7,875 $22,500 $30,000 18,281 Retained earnings Total common equity $28,125 $37,500 Total assets $37,500 $30,000 abilities and equity

Explanation / Answer

Cash and equivalents for Year 2 = 16,875 - 2,531 - 7,425 = 6,919

Net plant and equipment for Year 2 = Total assets - Total current assets = 37,500 - 16,875 = 20,625

Total current liabilities for Year 2 = 0 + 352 +1,992 = 2,344

Retained earnings for Year 2 = 28,125 - 18,281 = 9,844

Statement #1 : Flase because Option 2 is the right explaination

Statement #2 : True because Option 1 is the right explaination

Statement #3 : False because Option 3 is the right explaination

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