Retscan, Inc. has assets of $625,000, liabilities of $385,000, and equity of $240,000. It buys office equipment on credit for $1

Question

brilliants [131]

3 years ago

6

Retscan, Inc. has assets of $625,000, liabilities of $385,000, and equity of $240,000. It buys office equipment on credit for $1

25,000. The effects of this transaction include: Group of answer choices

Business

1 answer:

brilliants [131] · Answer 1 · 2022-03-21T14:05:01+03:00

Answer: a. Assets increase by $125,000 and liabilities increase by $125,000

Explanation:

The Office equipment bought are considered PPE which means they are fixed assets. Their acquisition will increase the assets held by the company by the value of the equipment, $125,000.

The equipment was however, bought on credit. This means that the company still owes the suppliers, payment for it which will see their liabilities increase by the same amount of $125,000.