Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity....

Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity.

1. Buy $15,000 worth of manufacturing supplies on credit

2. Issue $85,000 in stock

3. Borrow $63,000 from a bank

4. Pay $5,000 owed to a supplier

What is the net change in Total Liabilities?

Solutions

Expert Solution

Lets create the following table to understand the impact on the given transactions on Assets, Liabilities & Equity

Assets	Liabilities	Equity
15000 (Inventory increase)	15000 (AP increase)
85000 (cash increase)		85000 (stock increase)
63000 (cash increase)	63000 (debt/loan increase)
-5000 (cash decrease)	-5000 (AP decrease)
158000	73000	85000

The net change in Total Liabilities = 73000

ekkarill92 answered 1 year ago

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