Problem 2.7A (Static) Preparing a Balance Sheet and Statement of Cash Flows; Effects of Business Transactions (LO2-3, LO2-4, LO2-6)

The balance sheet items for Franklin Bakery (arranged in alphabetical order) were as follows at August 1, current year. (You are to compute the missing figure for Retained Earnings.)

Accounts payable	$	16,200		Equipment and fixtures	$	44,500
Accounts receivable		11,260		Land		67,000
Building		84,000		Notes payable		74,900
Capital stock		80,000		Salaries payable		8,900
Cash		6,940		Supplies		7,000
				Retained earnings		?

During the next two days, the following transactions occurred.

Aug.	2		Additional capital stock was sold for $25,000. The accounts payable were paid in full. (No payment was made on the notes payable or salaries payable.)
Aug.	3		Equipment was purchased at a cost of $7,200 to be paid within 10 days. Supplies were purchased for $1,250 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,890 if purchased through normal channels.

Required:

a. Prepare a balance sheet at August 1, current year.

b-1. Prepare a balance sheet at August 3, current year.

b-2. Prepare a statement cash flows for August 13.

c. Assume the notes payable do not come due for several years. Is Franklin Bakery in a stronger financial position on August 1 or on August 3?

Problem 2.7A (Static) Preparing a Balance Sheet and Statement of Cash Flows; Effects of Business Transactions (L02-3, LO2-4, LO2-6) The balance sheet items for Franklin Bekery (errenged in alphabetical order) were as follows at August 1, current year. (You are to compute the missing figure for Retained Earnings.) Accounts payable Accounts receivable Building Capital stock Cash $ 16,200 11,260 84,80 sa.ee 6.94e Equipment and fixtures Land Notes payable Salaries payable Supplies Retained carnings $ 44,500 67,000 74,920 8,920 7.000 ? During the next two days, the following transactions occurred. Aug.2 Additional capital stock was sold for $25,000. The accounts payable were paid in full. (No payment was made on the notes payable or salaries payable.) Aug.3 Equipment was purchased at a cost of $7,200 to be paid within 10 days. Supplies were purchased for $1,250 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,890 if purchased through normal channels. Required: a. Prepare o balonce sheet at August 1, current year. b-1. Prepare a balance sheet at August 3, current year. b-2. Prepare a statement cash flows for August 1-3. C. Assume the notes payable do not come due for several years. Is Franklin Bakery in a stronger financial position on August 1 or on August 3? Complete this question by entering your answers in the tabs below. Req A Req B1 Rey B2 Reqc Prepare a balance sheet at August 1, current year. FRANKLIN BAKERY Balance Sheet August 1, Current Year Llabilities & Owners' Equity Liabilities: Abaete $ 0 Total liabilities Owners' equity: 0 $ S Total Assets S Total Liabilities & Owners' Equity 0 CROQA Req B1 > Problem 2.7A (Static) Preparing a Balance Sheet and Statement of Cash Flows; Effects of Business Transactions (L02-3, LO2-4, LO2-6) The balance sheet items for Franklin Bekery (errenged in alphabetical order) were as follows at August 1, current year. (You are to compute the missing figure for Retained Earnings.) Accounts payable Accounts receivable Building Capital stock Cash $ 16,200 11,260 84,80 sa.ee 6.94e Equipment and fixtures Land Notes payable Salaries payable Supplies Retained carnings $ 44,500 67,000 74,920 8,920 7.000 ? During the next two days, the following transactions occurred. Aug.2 Additional capital stock was sold for $25,000. The accounts payable were paid in full. (No payment was made on the notes payable or salaries payable.) Aug.3 Equipment was purchased at a cost of $7,200 to be paid within 10 days. Supplies were purchased for $1,250 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,890 if purchased through normal channels. Required: a. Prepare o balonce sheet at August 1, current year. b-1. Prepare a balance sheet at August 3, current year. b-2. Prepare a statement cash flows for August 1-3. C. Assume the notes payable do not come due for several years. Is Franklin Bakery in a stronger financial position on August 1 or on August 3? Complete this question by entering your answers in the tabs below. Req A Req B1 Rey B2 Reqc Prepare a balance sheet at August 1, current year. FRANKLIN BAKERY Balance Sheet August 1, Current Year Llabilities & Owners' Equity Liabilities: Abaete $ 0 Total liabilities Owners' equity: 0 $ S Total Assets S Total Liabilities & Owners' Equity 0 CROQA Req B1 >