Question

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 Net fixed assets: Net plant and equipment Liabilities and equity Current liabilities: Accounts payable Accruals Notes payable Total current liabilities Long-term debt 2,953 8,662 $19,687 $6,457 2,363 6,930 $15,750 $0 410 2,324 $0 0 2,187 $%2,187 8,203 6,563 $19,250 Tl debt $10,937 $8,750 Common equity Common stock Retained earnings Total common equity Total liabilities and equity 21,328 17,063 9,187 $26,250 $35,000 $32,813 Total assets $43,750 $35,000 $43,750

Answer 1

1: Cash and cash equivalents = Total current assets – AR- Inventories

= 19687-2953-8662

=8072

2: Net plant and equipment = Total assets- current assets

= 43750-19687

=24063

3: Total current liabilities = Accounts payable + Accruals + notes payables

= 0+410+2324

=2734

4: Retained earnings = Total common equity – common stock

= 32813- 21328

=11485

5: Statement 1 is FALSE because

Accruals actually increased from year 1 to year 2

(Accruals have increased. Current liabilities have also increased )

6: Statement 2 is TRUE because

Option 3 is the answer

(The cash and cash equivalents balance in year 2 is 8072)

7: Statement 3 is FALSE because

Option 1 is true

(Equity shareholders are paid off in the end)

8: Increase

(If new stock is issued, there will be cash inflow)