You have the following comparative balance sheets for a restaurant for the years ending December 31, 0007, and December 31, 0008. Calculate the change in working capital and prepare the restaurant’s statement of sources and uses of working capital for the year ending December 31, 0008.

a. Net income for Year 0008 $7,000. Annual depreciation of $1,000 was included as an expense to arrive at net income.

b. New equipment costing $4,000 was purchased.

c. Dividends of $6,000 were paid out.

d. New shares (50 at $10 each) were issued.

e. The long-term loan was increased by $2,500.LO1

Transcribed Image Text:

ASSETS Yr. 0007 Yr. 0008 Current Assets Cash $14,800 $15,600 Credit card receivables 913 847 Accounts receivable 7,387 6,853 Food inventory 5,925 7,275 1,975 2,425 $31,000 $33,000 Beverage inventory Total Current Assets Property, Plant & Equipment Furnishings and equipment Accumulated depreciation Net Property, Plant & Equipment Total Assets LIABILITIES & STOCKHOLDERS' EQUITY 15,500 19,500 (3,500) ( 4,500) $12,000 $43,000 $15,000 $48,000 Current Liabilities Accounts payable Accrued expenses payable Taxes payable Total Current Liabilities $ 4,800 $ 7,100 800 700 1,400 200 $ 7,000 $ 8,000 Long-term Liabilities Long-term note payable Total Liabilities $25,800 $27,800 $32,800 $35,800 Common stock 4,200 5,200 Retained earnings 6,000 7,000 Total Stockholders' Equity $10,200 $12,200 Total Liabilities & Stockholders' Equity $43,000 $48,000