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.)
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Accounts payable
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$16,200.00
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Equipment and Fixtures
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$44,500.00
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Accounts Receivables
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$11,260.00
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Land
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$67,000.00
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Building
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$84,000.00
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Notes Payable
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$74,900.00
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Capital Stock
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$80,000.00
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Salaries Payable
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$8,900.00
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Cash
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$6,940.00
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Supplies
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$7,000.00
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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.