Financial Accounting

ACC500 Assignment 2 Attempt all Questions

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:

a. Prepare a balance sheet at August 1, 2015 b. 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.

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.

2. The following list of Balance sheet items are in random order for Alexander Farms, Inc., at September 30, 2015: Land $490,000.00 Fences and Gates $33,570.00 Barns and Sheds $78,300.00 Irrigation System $20,125.00 Notes Payable $330,000.00 Cash $16,710.00 Accounts Receivables $22,365.00 Lives stock $120,780.00 Citrus Trees $76,650.00 Farm Machinery $42,970.00 Account payable $77,095.00 Retained Earnings ? Property taxes Payable $9,135.00 Wages payable $5,820.00 Capital Stock $290,000.00

Instructions a. Prepare a balance sheet by using these items and computing the amount for

retained earnings. b. Assume that on September 30, immediately after this balance sheet was

prepared, a tornado completely destroyed one of the barns. This barn had a cost of $14,000 and was not insured against this type of disaster. Explain what changes would be required in your September 30 balance sheet to reflect the loss of this barn.