The balance sheet items of The Original Malt Shop (arranged in alphabetical order) were as follows at the close of business on September 30, 2001:
Accounts Payable $9,500
Accounts Receivable 1,250
Building 45,500
Cash 8,400
Furniture and Fixtures 20,000
Land 55,000
Kay Martin, capital 54,090
Notes payable ?
Supplies 3,440
The transactions occurring during the first week of October were:
Oct. 3 Martin invested an additional $ 30,000 cash in the business. The accounts payable were paid in full but no payment was made on the notes payable)
Oct 6. 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 to out of business. The supplies would have costn51.875 if purchased under normal circumstances
Oct 1-6 Revenues of $ 5.500 were earned and paid in cash. Expenses required to earn the
revenues of $4,000 were incurred and paid in cash
(a) Prepare a balance sheet at September 30, 2015. (You will need to compute the missing figure
for Notes Payable.) (b) Prepare a balance sheet at October 6, 2015.
(c) Assume that 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.
