Prepare a balance sheet and a statement of cash flows

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Question: 1. The balance sheet items for Franklin Bakery (Arranged in Alphabetical order) were as follows at August 1, 2015. (you are to compute the missing figure for Retained Earnings.)

Accounts payable

$16,200.00

Equipment and Fixtures

$44,500.00

Accounts Receivables

$11,260.00

Land

$67,000.00

Building

$84,000.00

Notes Payable

$74,900.00

Capital Stock

$80,000.00

Salaries Payable

$8,900.00

Cash

$6,940.00

Supplies

$7,000.00

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 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: Prepare a balance sheet at August 1, 2015

Prepare a balance sheet at August 3, 2015, and a Statement of cash Flows for August 1 - 3. Classify the payment of account payable and the purchase of supplies as operating activities.

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.

Reference no: EM131880875

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