The balance sheet items for Collier Butcher Shop (arranged in alphabetical order) were as follows at July
Question:
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.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello