Question

Year 2 Year 1 234 1,328 Fuzzy Button Clothing Company 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 $3,690 Accounts payable Accounts receivable 1,688 1,350 Accruals Inventories 4,950 3,960 Notes payable Total current assets $9,000 Total current liabilities Net fixed assets: Long-term debt Net plant and equipment 11,000 Total debt Common equity: Common stock Retained earnings Total common equity Total assets $25,000 $20,000 Total liabilities and equity 1,250 $1,250 4,688 $6,250 3,750 $5,000 12,188 9,750 5,250 $15,000 $20,000 $18,750 $25,000

Answer 1

A balance sheet always tallies

Cash and cash equivalents = 11,250-1688-4950

= $4612

Net plant and Equipment = 25000-11250

= $13750

Total current liabilities = 0+234+1328 = $1562

Retained earnings = 18750-12188 = $6562

True

Total inventory increased from 3960 to 4950

False

As current liabilities increased by 312 and long term debt by 938

Increase, as cash will be received on issue of shares