Question

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 sheets for Green Caterpillar Garden Supplies Inc. for the years ending December 31, Year 2 and 1, respectively. Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year ended December 31 Year 2 Year 1 Year 1 Year 2 Assets Current assets: Cash and equivalents $0 $4,688 $26,562 $0 Accounts receivable $73,800 $27,000 $79,200 $180,000 $33,750 $99,000 $225,000 Inventories Total current assets Liabilities and equity Current liabilities: Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total debt Common equity: Common stock Retained earnings Total common equity Total liabilities and equity $25,000 $25,000 $75,000 $100,000 $93,750 $125,000 Net fixed assets: Net plant and equipment $220,000 $243,750 $195,000 $105,000 $300,000 $400,000 $375,000 $500,000 $500,000 $400,000

Answer 1

Calculation of Missing data in the Balance Sheet by using Existing data

Note-1

Cash and Cash Equivalents:
Total current assets= $225,000
Cash and Cash Equivalents+Accounts Receivable+Inventories=Total Current Assets

Cash and Cash Equivalents+$33,750+$99,000=$225,000
Cash and Cash Equivalents+$132,750=$225,000
Cash and Cash Equivalents=$225,000-$132,750=$92,250

Note-2

Net Plant and Equipment:
Total Assets=Fixed Assets (Net fixed assets) +Current Assets
$500,000= Fixed Assets (Net fixed assets)+$225,000
Fixed Assets(Net fixed assets)=$500,000-$225,000=$275,000

Note-3

Total Current Liabilities:
Total Debt-Long term debt
$125,000-$93,750=$31,250

Note-4

Retained Earnings:
Retained Earnings=Total Common Equity-Common Stock
                                   $375,000-$243,750=$131,250  

Statement#1:

This statement is correct because The accounts payable accounted remained $0 for both year1 and year 2

Statement#2:

This statement is true because Green Caterpillar’s total notes payable increased by $1,562, while its common stock account increased by $18,750

Statement#3:

This statement is Incorrect because Common Shareholders are treated as residual investors

Based on our understanding of the items reported in the balance sheet and information they provide, The Company's assets should be listed in the order in which they are to be converted into cash.