Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson...
Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson received $3,000 worth of services that it needed and was billed for those services later, then how would assets, liabilities and equity look now?
| A. |
Assets = $160,000; Liabilities = $44,000; Equity = $116,000 |
|
| B. |
no change in balances |
|
| C. |
Assets = $157,000; Liabilities = $41,000; Equity = $116,000 |
|
| D. |
Assets = $157,000; Liabilities = $38,000; Equity = $119,000 |
Homework Answers
A. Assets = $160,000; Liabilities = $44,000; Equity = $116,000.
In question,
Asset = $160,000, liabilities = $41,000, and equity = $119,000.
An expense worth $3,000 has occured on account
When expense on account occurs there is an increase in Accounts payable under liabilities and a decrese in Retained earnings under Equity (Net income decreases)
Therefore, ther is a decrease of $3,000 in retained earnings and an increase of $3,000 in Accounts payable.
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