Asked by Trevia Knight on Jun 21, 2024
Verified
(a) A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the effect of the sale on the
total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity?
(b) Assume that the seller owes $52,000 on a loan for the land. After receiving the $127,000 cash in (a), the
seller pays the $52,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets,
(2) liabilities, and (3) stockholders' equity?
Seller's Assets
Properties or financial resources owned by a seller, which can include inventory, buildings, equipment, or intellectual property.
Liabilities
Liabilities represent the financial obligations a company owes to outside parties, such as debt and accounts payable.
Stockholders' Equity
The residual interest in the assets of a corporation after deducting liabilities, indicating the net value owned by the shareholders.
- Absorb the principles of the accounting equation and how individual transactions modify it.
- Quantify and appraise the entirety of assets and liabilities in varied cases.
Verified Answer
CW
Corey WilsonJun 27, 2024
Final Answer :
(a) (1) Total assets increased $44,000
(2) No change in liabilities
(3) Stockholders' equity increased $44,000
(b) (1) Total assets decreased $52,000
(2) Total liabilities decreased $52,000
(3) No change in stockholders' equity
(2) No change in liabilities
(3) Stockholders' equity increased $44,000
(b) (1) Total assets decreased $52,000
(2) Total liabilities decreased $52,000
(3) No change in stockholders' equity
Learning Objectives
- Absorb the principles of the accounting equation and how individual transactions modify it.
- Quantify and appraise the entirety of assets and liabilities in varied cases.