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6. The accounting equation for Sock Monkey Company is as follows: Assets $480,000 Liabilities $240,000 Stockholders Equity $
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  • Correct Answer = Option ‘D’
    The accounting equation will change to--
    Asset $ 540000 = Liabilities $ 240000 + Equity $ 300,000
  • New stock issue will:
    --Increase Cash by $ 60000, thereby increasing total assets. [480000 + 60000 = 540000]
    --Increase Common Stock by $ 60000, thereby increasing total equity [240000 + 60000 = 300000]
    --Liabilities will stay unaffected.
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