Reference no: EM132536879
The January 1 balance sheet of the Marvin Company, an unincorporated business, is as follows:
MARVIN COMPANY
Balance Sheet
As of January 1
Assets Liabilities and Owner's Equity
Cash $25,000 Notes Payable $20,000
Inventory 50,000 Capital 55,000
Total $75,000 total: $75,000
The following transactions took place in January
- Jan 4 Merchandise was sold for $12,000 cash that had cost $7000
- Jan 6 To increase inventory, Marvin place an order with Star Company for merchandise that would cost $7000
- Jan 8 Marvin receive the merchandise ordered from Star and agreed to pay the $7000 in 30 days.
- Jan 11 Merchandise costs $1500 was sold for $2500 in cash
- Jan 16 Merchandise costing $2000 was sold for $3400 on 30 day open account
- Jan 26 Marvin paid employees for the month $4200 in cash
- Purchased Land for $20,000 in cash
Marvin purchase a two year insurance policy for $2800 in case.
Required:
Question 1: Describe the impact of each transaction on the balance sheet, and prepare an example of new balance sheet as of January 31.