The balance sheet items for Franklin Bakery (arranged in alphabetical order) were as follows at August 1,

Question:

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.)
The balance sheet items for Franklin Bakery (arranged in alphabetical

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.
Instructions
a. Prepare a balance sheet at August 1, current year.
b. Prepare a balance sheet at August 3, current year, and a statement of cash flows for August 1-3. 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 Franklin Bakery in a stronger financial position on August 1 or on August 3? Explain briefly.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Balance Sheet
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...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial and Managerial Accounting the basis for business decisions

ISBN: 978-1259692406

18th edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

Question Posted: