and originally purchased for $30,000 is sold for $62,000 in cash. What is the effect of the sale on the accounting equation? a. assets increase by $62,000; liabilities decrease by $30,000; owner's equity increases by $32,000 b. assets increase by $32,000; owner's equity increases by $32,000 c. assets increase by $30,000; no change in liabilities; owner's equity increases by $62,000 d. assets increase by $62,000; owner's equity increases by $62,000

Question

Alayna Bolton

Business

14 November, 16:30

and originally purchased for $30,000 is sold for $62,000 in cash. What is the effect of the sale on the accounting equation? a. assets increase by $62,000; liabilities decrease by $30,000; owner's equity increases by $32,000 b. assets increase by $32,000; owner's equity increases by $32,000 c. assets increase by $30,000; no change in liabilities; owner's equity increases by $62,000 d. assets increase by $62,000; owner's equity increases by $62,000

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Answers (1)

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Joslyn Small · Answer 1

B: assets increase by $32,000; owner's equity increases by $32,000

Explanation:

The good was in the inventory valued at $30,000. The movements in accounting are:

Cash increases by 62,000 - -> assets increase by 62,000 Sales Increases by 62,000 - -> owner's equity increases by 62,000 Cost of sales increases by 30,000 - -> owner's equity decreases by 30,000 Inventory decreases by 30,000 - -> assets decrease by 30,000 Net results: assets + 62,000 - 30,000 = + 32,000 owner's equity + 62,000 - 30,000 = + 32,000