Question

The accounting equation for Oriole Company is as follows:

Assets		Liabilities		Stockholders' Equity
$119200	=	$59600	+	$59600

If Oriole purchases office equipment on account for $25800, the accounting equation will change to

Assets

Liabilities

Stockholders' Equity

$145000

=

$72500

+

$72500

$145000

=

$85400

+

$59600

$119200

=

$59600

+

$59600

$145000

=

$59600

+

$85400

Answer 1

Solution : Option B ($145000=$85400  +$59600) is the correct answer.

If Oriole purchases office equipment on account for $25800, the accounting equation will change in the following manner:

Assets shall increase from $1,19,200 to $1,45,000 ($1,19,200+$ 25,800) when purchased office equipment on account where as in the liabilities it shall increase from $ 59,600 to $ 85,000( $ 59,600+$ 25,800) and there shall be no change in equity and shall remain the same.

From the above we can conclude that revised accounting equation after adjustment shall be as below:

Assets = Liabilities + Stockholder’s equity

$ 1,45,000 = $ 85,000 +$ 59,600

Conclusion : From the above we can understand that OPTION B satisfies the given requirement in the question whereas remaining options A,C,D do not satisfy the given requirement in question.

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answered by: anonymous