The January 1 balance sheet of the Marvin Company, an unincorporated business, is as follows:

The following transactions took place in January:
Jan. 4 Merchandise was sold for $12,000 cash that had cost $7,000.
6 To increase inventory, Marvin placed an order with Star Company for merchandise that would cost $7,000.
8 Marvin received the merchandise ordered from Star and agreed to pay the $7,000 in 30 days.
11 Merchandise costing $1,500 was sold for $2,500 in cash.
16 Merchandise costing $2,000 was sold for $3,400 on 30-day open account.
26 Marvin paid employees for the month $4,200 in cash.
29 Purchased land for $20,000 in cash.
31 Marvin purchased a two-year insurance policy for $2,800 in cash.
Required:
Describe the impact of each transaction on the balance sheet, and prepare a new balance sheet as of January 31.

Transcribed Image Text:

MARVIN COMPANY Balance Sheet As of January 1 Assets Liabilities and Owners' Equity Cash Inventory Total 525,000 50,000 $75,000 Notes payable Capital $20,000 55,000 $75,000 Total