insured. Explain e loss of this as ver Farms at Septem The balance sheet items of The Original Malt Shop (arranged in alphabetical order) were as fol- PROBLEM 2.8 lows at the close of business on September 30, 2001: Preparing Francal Steamers Effects of Business Traction Accounts Payable $8.500 Land 555.000 LO 4. 5. 6 Accounts Receivable 1.250 Kay Martin, Capital 54,090 $21.579 45.500 Building 2012 7.400 Notes Payable Supplies 3,440 Casn 1670 Funiture and Fixtures 20.000 4201 1 The transactions occurring during the first week of October were: 1.01 Oct. 3 unt for Hollis Robes 42. (After Ban heading for your as prepared, m D. and was not i in your September rder) were as foll ity.) Oct. 6 Martin invested an additional $30.000 cash in the business. 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 un der normal circumstances. Oct. 1-6 Revenues of $5.500 were earned and paid in cash: Expenses required to cam the revenues of $4,000 were incurred and paid in cash. Instructions Prepare a balance sheet at September 30, 2001 (You will need to compute the misung figure for Notes Payable.) Prepare a balance sheet at October 6, 2001. Also prepare an income statement and a statement of cash flows for the period October 1-6, 2001. In your statement of cash flows, treat the pur- chase of supplies and the payment of accounts payable as operating activities Assume the note payable does not come due for several years. Is The Original Malt Shop in a stronger financial position on September 30 or on October 6? Explain briefly.