L02-3, LO2-4, LO2-6 PROBLEM 2.7B Preparing a Balance Sheet and Statement of Cash Flows; Effects of Business Transactions The balance sheet items for Collier Butcher Shop (arranged in alphabetical order) were as follows at July 1 , current year. (You are to compute the missing figure for Retained Earnings.) During the next few days, the following transactions occurred. July 4 Additional capital stock was sold for $36,000. The accounts payable were paid in full. (No payment was made on the notes payable or salaries payable.) July 5 Equipment was purchased at a cost of $7,200 to be paid within 10 days. Supplies were purchased for $1,200 cash from a restaurant supply center that was going out of business. These supplies would have cost $2,400 if purchased through normal channels. Instructions a. Prepare a balance sheet at July 1 , current year. b. Prepare a balance sheet at July 5, current year, and a statement of cash flows for July 1-5. Classify the payment of accounts payable and the purchase of supplies as operating activities. c. Assume the notes payable do not come due for several years. Is Collier Butcher Shop in a stronger financial position on July 1 or on July 5 ? Explain briefly