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Capital & Liabilities Assets

Marvin & Co. had various business transactions in January that impacted its balance sheet. It sold inventory for cash, ordered more inventory on credit, received the ordered inventory agreeing to pay later, and sold more inventory for both cash and credit. It also paid employees, purchased land and insurance in cash. The new January 31 balance sheet shows increases in cash from sales and decreases from purchases and payments, and decreases in inventory from sales and an increase from the purchase on credit. Total assets and liabilities/capital remain equal.

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91 views1 page

Capital & Liabilities Assets

Marvin & Co. had various business transactions in January that impacted its balance sheet. It sold inventory for cash, ordered more inventory on credit, received the ordered inventory agreeing to pay later, and sold more inventory for both cash and credit. It also paid employees, purchased land and insurance in cash. The new January 31 balance sheet shows increases in cash from sales and decreases from purchases and payments, and decreases in inventory from sales and an increase from the purchase on credit. Total assets and liabilities/capital remain equal.

Uploaded by

rudypatil
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ZC415 August 2017

The January 1 Balance Sheet of the Marvin & Co. is as follows:

Capital & Liabilities Assets


Capital 55000 Inventory 50000
Notes Payable 20000 Cash 25000
Total 75000 Total 75000

The following transactions took place in January:

Jan 4 Merchandise was sold for 12,000 in cash that had cost 7000.
6 To increase inventory, Marvin placed an order with Star Company for
merchandise that would cost 7000.
8 Marvin received the merchandise ordered from Star and agreed to pay
7000 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-days credit.
26 Marvin paid employees for the month 4,200 in cash.
29 Purchased land for 20,000 in cash.
31 Marvin purchased a 2-year insurance policy for 2,800 in cash.

Describe the impact of each transaction on the balance sheet and prepare a new balance sheet as of
January 31.

CA.Dr. Mahalakshmi M

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