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5 February, 20:27

Tom's T. V.'s sold one of their premium products, a new 60" flat screen 3D T. V. to a customer who paid $2,000 in cash. How would the receipt of payment from this sale impact the accounting equation?

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  1. 5 February, 20:29
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    Impact of $2,000 sale on accounting equation is as follow:

    Accounting Equation

    Asset = Equity + Liabilities

    Cash+2000 Sales+2,000 No Effect

    As cash an asset for the business, so the receipt will increase the balance of assets of the company. The revenue is ultimately adjusted to equity in the form of net income after deducting all the expenses. This transaction will result in increase of equity balance by the sale amount.

    Explanation:

    The Following journal Entry will support my answer:

    Sales amount = 2,000

    As this transaction is made on cash basis the following Journal entry will be recorded for this event.

    Dr. Cr.

    Cash $2,000

    Sales $2,000
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