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27) Garrison Company acquired $23,000 by issuing common stock. Which of the following accurately reflects how this event affects the companys financial statements? AssetsLiab.+Equity Rev.Exp.Net Ine. Cash A. 23,000NA 23,000 NA B. 23,000 NA23,000 23,000 C. 23,00023,000 NA 23,000 D. 23,00023,000 NA 23,000 Stmt of Flows NA 23,000 FA 23,000 23,000 NA 23,000 NA23,000 23,000 FA FA OA 27) A) Option A B) Option B C) Option C D) Option D
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23) The correct answer of the question is Option A because when common stock is issued, it leads to inflow of cash which is a current asset, so assets will get increase by $23,000. At the same time, Stockholders' Equity will increase by $23,000. The Issuance of common stock is a Financing Activity. So, the net effect of the transaction on the income is nil. It will be increase both assets and liabilities by $23,000.

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