Owens Industries is trying to increase its profile in the community. As part of this effort, Owens sponsors a Little League base

Question

3 years ago

11

Owens Industries is trying to increase its profile in the community. As part of this effort, Owens sponsors a Little League base

ball team. The cost of sponsorship is $850. How should Owens record this transaction in order to maintain a balanced accounting equation (A = L + SE)?

Mathematics

1 answer:

jarptica [38.1K] · Answer 1 · 2022-06-05T14:35:34+03:00

<h2>Answer:</h2>

<em><u>The Owens Industries should credit $850 to their Assets, denoted by A and debit the sum of $850 to the Stockholder's Equity, denoted by SE.</u></em>

<h2>Step-by-step explanation:</h2>

In the question,

As the Owens industries is trying to increase its profile.

Cost of sponsorship = $850

To maintain the profile he can, by using the transaction accounting balance equation,

A = L + SE

<em><u>The Owens Industries should credit $850 to their Assets, denoted by A and debit the sum of $850 to the Stockholder's Equity, denoted by SE.</u></em>

That is,

$850 = L + $850

L = 0

<u>This is how the accounting equation can be balanced.</u>