Question

On June 5, 20x3, Logan Ltd. sold merchandise inventory to a customer for $42,000, on credit....

  1. On June 5, 20x3, Logan Ltd. sold merchandise inventory to a customer for $42,000, on credit. The cost of the inventory to Logan was $36,000. What is the effect of this business transaction on the accounting equation of Logan?

    1. a) Assets increase $42,000, liabilities do not change, and equity increases

      $42,000

    2. b) Assets increase $6,000, liabilities decrease $6,000, and equity increases

      $6,000

    3. c) Assets increase $6,000, liabilities do not change, and equity increases $6,000

    4. d) Assets increase $78,000, liabilities decrease $36,000, and equity increases

      $42,000

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Answer #1

Answer: c) Assets increase $6,000, liabilities do not change, and equity increases $6,000

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