Chapter 2 Basic Financial Statements Instructions 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. The balance sheet items of The Soda Shop (arranged in alphabetical order) were as follows at the close of business on September 30, 2021. Accounts Payable Accounts Receivable Building Capital Stock Cash $ 8,500 Furniture and Fixtures 20,000 1,250 Land $55,000 45,500 Notes Payable.. ? 50,000 Retained Earnings 4,090 7,400 Supplies 3,440 The transactions occurring during the first week of October were as follows. Oct. 3 Oct. 6 Additional capital stock was sold for $30,000. The accounts payable were paid in full. (No payment was made on the notes payable.) More furniture was purchased on account at a cost of $18,000, to be paid within 30 days. Supplies were purchased for $1,000 cash from a restaurant supply center that was going out of business. These supplies would have cost $1,875 if purchased under normal circumstances. Oct. 1-6 Revenues of $5,500 were earned and received in cash. Expenses required to earn the revenues of $4,000 were incurred and paid in cash. Instructions a. Prepare a balance sheet at September 30, 2021. (You will need to compute the missing figure for Notes Payable.) b. Prepare a balance sheet at October 6, 2021. Also prepare an income statement and a statement of cash flows for the period October 1-6, 2021. In your statement of cash flows, treat the pur- chase of supplies and the payment of accounts payable as operating activities. c. Assume the notes payable do not come due for several years. Is The Soda Shop in a stronger financial position on September 30 or on October 6? Explain briefly. BLOGUINES UIoned in BOS TID Filialicial Accoun D Elementi: 11 PP Tut