Question

Lab 2 fall 2020 Saved ut References Mailings Review View Table Design Layout Tell me А Аа AO E 15 Anib ea AHMC D4B AaBb AaBbCcDdE AaBb A-DA- No Spacing Heading Heading 2 On September 1, Marina, Inc. purchased $500,000 worth of merchandise inventory on credit. On September 14, Marina paid $500,000 cash related to this purchase. 4. The journal entry to record the September 1 transaction will have the following effect on Marina's financial statements: Total Expenses will increase by S500,000 b. Total Liabilities will increase by $500,000. c. Total Assets will decrease by $500,000. d. Total Stockholders' Equity will decrease by $500,000. e. None of the above. a statements: 5. The journal entry to record the September 14 transaction will have the following effect on Marina's financial a. Total Expenses will increase by $500,000 b. Total Liabilities will increase by $500,000. c. Total Assets will decrease by $500,000. d. Total Stockholders' Equity will decrease by $500,000. e. None of the above. 1

Answer 1

4) The journal entry for September 1 is as follows:

Date	Account and Explanation	Debit($)	Credit($)
September 1	Merchandise Inventory	500,000
	Account Payable		500,000
	(Recorded the purchase of merchandise Inventory)

The Account Payable will increase lead to an increase in the current liability of the company and then the total liability of the company will also increase.

So correct answer is option (b) Total liabilities will increase by $500,000.

5) The journal entry for September 14 is as follows:

Date	Account and Explanation	Debit($)	Credit($)
September 14	Account Payable	500,000
	Cash		500,000
	(Recorded the payment of Account Payable)

The payment of the account payable lead to outflow of the cash. Therefore, the cash balance in the current assets decreases.As current asset decreases lead to the total assets decrease by $500,000.

So correct answer is option (c) or Total assets decrease by $500,000.