Mune Company recorded journal entries for the declaration of $150,000 of dividends, the $96,000 increase in accounts receivable for services rendered, and the purchase of equipment for $63,000. What net effect do these entries have on owners' equity?
A) Decrease of $213,000.
B) Decrease of $117,000.
C) Decrease of $54,000.
D) Increase of $33,000.

Question

Quizplus · Accepted Answer

The declaration of dividends decreases owners' equity by $150,000. The increase in accounts receivable for services rendered increases owners' equity by $96,000. The purchase of equipment does not directly affect owners' equity. Therefore, the net effect is a decrease of $54,000 ($150,000 - $96,000).

Mune Company Recorded Journal Entries for the Declaration of $150,000