Cookies & Pastries, Inc., started business on July 1, 2010, with a $16,000 cash contribution from its owners in exchange for common stock. The company used $7,500 of the cash for equipment for the new shop and $3,500 for cookies and pastries for its inventory. During the month, the company earned $7,000 cash revenue from the sale of the entire inventory. On July 31, 2010, the owners spent $5,000 for more cookies and pastries for the inventory. What is the balance in retained earnings on July 31, 2010? How much cash does the company have on hand on July 31, 2010? Use the accounting equation to help answer the questions.
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