Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson collected...

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Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson collected...

Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson collected $14,000 cash from a previous client that was owing Thompson, from a prior sale on credit, then how would assets, liabilities and equity look now?

	A.	no change in balances
	B.	Assets = $174,000; Liabilities = $41,000; Equity = $133,000
	C.	Assets = $174,000; Liabilities = $24,000; Equity = $150,000
	D.	Assets = $174,000; Liabilities = $58,000; Equity = $116,000

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Answer 1

Answer #1

Thompson Corporation having Debtor balance of $14000 and now Receiving cash for the Sales on credit will have no change in balances

Explanation

Now assuming,

Asset consist has Cash and Debtor Balance $1,46,000 and $14,000 respectively at the time of sales on credit.

Total Asset = Cash + Debtors

$1,60,000=$146000+$14000

Now, after receiving cash for such sales on credit this will reduce Debtor balance to 0 and Cash balance get increased by $14000.

So, Total Assets=Cash + Debtors

$1,60,000=$1,60,000+$0

And the balances of Liabilites and Equity will remain unaffected.

So, Final Answer is there will be no change in any balances

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Answer 2

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Thompson Corporation currently has assets of $160,000, liabilities of $41,000, and equity of $119,000. If Thompson collected...

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