At the beginning of the month, a company purchased a new truck for $135,000, paying $63,000 cash and agreeing to pay the balance over 12 months through a no-interest financing offer provided by the car dealer. The entry to record the purchase of the truck is recorded at month-end.
What would the effect of this transaction on the company's current month-end accounting equation? (Hint: First financing payment was made before current month-end.)
A) No effect on Assets; $135,000 decrease in Liabilities; $135,000 increase in Stockholders' Equity
B) $66,000 increase in Assets; $66,000 increase in Liabilities; No effect on Stockholders' Equity
C) $135,000 increase in Assets; No effect on Liabilities; $135,000 increase in Stockholders' Equity
D) No effect on Assets; $72,000 increase in Liabilities; $72,000 decrease in Stockholders' Equity

Question

Quizplus · Accepted Answer

11ee7640_e1fe_7c11_90da_a5be822b5c69_TBCB1007_00 11ee7640_e1fe_7c12_90da_ffdca756ee4f_TBCB1007_00 11ee7640_e1fe_7c13_90da_afde87076c01_TBCB1007_00 Total change in assets = $135,000 + ($69,000) = $66,000

At the Beginning of the Month, a Company Purchased a New