Ch 03: Assignment- Financial Statements, Cash Flow, and Taxes end of its first y

Question

Ch 03: Assignment- Financial Statements, Cash Flow, and Taxes 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: Liabilities and equity Current liabilities: $0 $0 Cash and equivalents Accounts receivable Inventories $1,845 Accounts payable 844 2,475 $5,625 675 Accruals 625 $625 1,875 $2,500 1,980 Notes payable 664 Total current assets $4,500 Total current liabilities 2,344 $3,125 Net fixed assets: Long-term debt Net plant and equipment $5,500 Total debt Common equity: 4,875 2,625 $7,500 $10,000 6,094 Common stock Retained earnings $9,375 $12,500 Total common equity $12,500 $10,000 Total liabilities and equity Total assets Given the information in the preceding balance sheet-and assuming that Green Caterpillar shares of common stock outstanding-read each of the following statements, then identify the information conveyed by the balance sheet. selection that best interprets the Caternillars nool of relatively liquid assets, which are available to support the

Explanation / Answer

NOTE: The two sides of the balance sheet (assets and liabilities) will be solved separately one after the other.

Assets:

Total Current Assets = Cash and Equivalent + Accounts Receivable + Inventories = $ 5625

Cash and Equivalent + 844 + 2475 = 5625

Cash and Equivalent = 5625 - 844 - 2475 = $ 2306

Total Currrent Assets + Net Plant and Equipment = Total Assets 5625 + Net Plant and Equipment = $ 12500

Net Plant and Equipment = 12500 - 5625 = $ 6875

Liabilities and Shareholders Equity:

Total Current Liabilities = Accounts Payable + Accruals + Notes Paybale = 0 + 117 + 664 = $ 781

Total Common Equity = Common Stock + Retained Earnings

9375 = 6094 + Retained Earnings

Retained Earnings = 9375 - 6094 = $ 3281

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