The following are transactions relating to Crow, a wholesaler, during] anuary 19X 1 :

(a) Commences business with £400 of his own cash, and £600 borrowed at an interest rate of 3% per quarter.

(b) Purchases a van for the firm for £800 on credit.

(c) Purchases inventory for resale for £400 on credit.

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(d) Sells three-quarters of inventory for £ 1000, £500 on credit and £500 for cash.

(e) Purchases inventory for £200 in cash.

(jl Pays rent for first six months of £500.

(g) Incurs wages of £180 in cash, but in addition is still owing £50 at the end of January.
(h) Purchase a vintage car for the firm for £300 in cash but decides that it is not necessary and sells it for £700.
(i) The depreciation expense for the van for the first month is £50.
(J) Withdraws £60 as a share of the anticipated profit for January.
Analyse this information using the fundamental accounting equation and prepare a profit statement and balance sheet. Explain the relationship between the cash flow of the firm and its profit for January 19X1.