The January 1 balance sheet of the Marvin Company, an unincorporated business, is as follows: The following
Question:
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.
Step by Step Answer:
Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant