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