John invests $30,000 in JHL Inc. in exchange for common stock. How would this affect the...
John invests $30,000 in JHL Inc. in exchange for common stock. How would this affect the basic accounting equation for JHL Inc.?
Group of answer choices
No change to assets; No change to liabilities; Increase stockholders’ equity
Decrease assets; No change to liabilities; Increase stockholders’ equity
Decrease assets; Increase liabilities; No change to stockholders’ equity
Increase assets; No change to liabilities; Increase stockholders’ equity
Increase assets; Increase liabilities; No change to stockholders’ equity
Homework Answers
Correct answer---------Increase assets; No change to liabilities; Increase stockholders’ equity.
.
In JHL Inc, cash balance will increase with $30,000 and common stock will increase by $30,000. So both assets and stockholder's equity will increase by $30000. There will be no effect on liabilities in accounting equation as no liability account is involved in this transaction.
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John invests $30,000 in JHL Inc. in exchange for common stock.
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