Music Mart Inc

Dr
Assets

Inventory 4500
5000
-1500
-1700
-750
-850
4700

Cash 33250
2300
-1224
-6000
3000
-1000
-6000

1310
25636
Land 24000
-12000
12000

Accounts Receivable 2620

2620
Insurance Policy 1224
1224

Total Liabilities and Stock Equity

Cr
Liabities
Notes Payable 12500
-6000
6500

Accounts Payable 5000

Mortgage (Liability) 18000
-9000
 9000

Stockholder's Equity
Capital Stock 25000
-1000
-750

23250

Retained Earnings 250

800
920
460
2430
 Asset

General Journal

Debit Credit Dr Cr
1 Inventory 5000
Accounts Payable 5000
2 Cash 2300
Revenue Earned (RE) 800
Inventory 1500
3 Accounts Receivable 2620
Inventory 1700
Revenue Earned (RE) 920
4 Insurance Policy (Asset) 1224
Cash 1224
5 Land 24000
Cash 6000
Mortgage (Liability) 18000
6 Cash 3000
Mortgage (Liability) 9000
Land 12000
7 Goodwill 6030
Equity 26970
Offer (Liability) 33000
8 Capital Stock 1000
Cash 1000
9 Capital Stock 750
Inventory 750
10 No entry -33000 -33000

11 Notes Payable 6000

Cash 6000
12 Cash 11000
Capital Stock 11000
13 Cash 1310
Inventory 850
Revenue Earned (RE) 460

Music Mart Inc

Balance Sheet
As on Jan 31

Assets
Inventory 4700
Cash 25636
Land 12000
Accounts Receivable 2620
Insurance Policy 1224
Total Assets 46180

Liabilities
Notes Payable 6500
Accounts Payable 5000
Mortgage 9000
Total Liabilities 20500

Stockholder's Equity
Capital Stock 23250
Retained Earnings 2430
Total Equity 25680
Total Liabilities and Stock Equity 46180
Name it as prepaid insurance
Current assets are only valued for a period of a year
So even for the policy it is valid for a year

Change in equity hence the owners are also not getting rich
Growth in assets is present but growth in business not there