Illustrate the impact of each transaction

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Reference no: EM131341148

The balance sheet of the Marvin Company as at 1 January follows:

Assets		Owner's equity and liabilities
	EUR		EUR
Inventory	50,000	Capital	55,000
Cash	25,000	Short-term borrowings	20,000
Total	75,000	Total	75,000

The following transactions took place in January:

1. Goods, costing EUR 7,000, were sold for EUR 12,000 cash;

2. To increase inventory, Marvin placed an order to Star Company Merchandise for EUR 7,000;

3. Marvin received the goods ordered from Star and agreed to pay EUR 7,000 in 30 days;

4. Goods costing EUR 1,500 were sold for EUR 2,500 in cash;

5. Goods costing EUR 2,000 were sold for EUR 3,400 on credit;

6. Marvin paid the employees for January EUR 4,200 in cash;

7. Purchased land for EUR 20,000 in cash;

8. Marvin purchased a two-year insurance policy for EUR 2,800 in cash.

Illustrate the impact of each transaction on the accounting equation and prepare an income statement for the month of January and a new balance sheet as at 31 January.

Reference no: EM131341148

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