Reference no: EM132792898
Preparing a statement of financial position and cash flow statement'; (effects of business transactions)
The statement of financial position items for the tasty bakery (arranged in alphabetical order) were as follows at August 1, 20x5 ( you are to compute the missing figure for retained earnings)
Accounts payable 16,200
Accounts receivable 11,260
Building 84,000
Cash 6,940
Equipment and fixture 44,500
Share capital 80,000
Land 67,000
Notes payable 74,900
Salaries payable 8,900
Supplies 7,000
During the next two days, the following transaction occurred:
- Aug 2 Additional share capital was sold for 25,000. The accounts payable were paid in full. (no payment was made on the notes payable or income taxes payable)
- Aug 3 Equipment 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.
Requirements:
Problem a. make a statement of financial position at august 1, 20x5
Problem b. make a statement of financial position at august 3, 20x5 and a cash flow statement for August 1-3. Classify the payment of accounts payable and for purchase of supplies as operating activities
Problem c. Assume the note payable does not come due for several years. Is the Tasty Bakery in a stronger financial position on August 1 or on August 3? Explain briefly.