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.