Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Subject: General Accounting

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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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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