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Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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
Transcribed Image Text:The F Company sold the land for $86,000 in cash. The land was originally
purchased for $56,000, and at the time of the sale, $17,000 was still owed to
First National Bank on that purchase. After the sale, The F Company paid off the
loan to First National Bank. What is the effect of the sale and the payoff of the
loan on the accounting equation?
1. assets increase by $20,000; liabilities decrease by $15,000; owner's equity
increases by $5,000
2. assets increase by $60,000; liabilities decrease by $15,000; owner's equity
increases by $20,000
3. assets increase by $13,000; liabilities decrease by $17,000; owner's equity
increases by $30,000
4. assets increase by $20,000; liabilities decrease by $15,000; owner's equity
increases by $35,000
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