FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:You are the bookkeeper for Harley Inc., a newly formed corporation. Harley had the following
transactions for their business:
* Four shareholders contributed $40,000 ($10,000 each) in exchange for Harley common stock.
* Harley purchased inventory for $5,000. Harley received an invoice for the inventory that is due
in 30 days.
What are the effects on Harley's accounting equation?
A
B
D
Based on the two transactions, Assets increased by $40,000, Liabilities decreased by $5,000 and Shareholder Equity
increased by $45,000.
Based on the two transactions, Assets increased by $45,000, Liabilities increased by $5,000 and Shareholder Equity
increased by $40,000.
C Based on the two transactions, Assets increased by $15,000, Liabilities increased by $5,000 and Shareholder Equity
increased by $10,000.
Based on the two transactions, Assets increased by $35,000, Liabilities decreased by $5,000 and Shareholder Equity
increased by $40,000.
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