Al Dunn Bakery bought a new oven for $1,380. Al paid $300 as a cash down payment and will pay the balance in 30 days. Total assets increased by $1,080.

Question

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This is a correct accounting transaction where the purchase of the oven would increase the assets of the business by the full amount of $1,380. The cash down payment of $300 would decrease the cash assets but would have no effect on the total assets. The remaining balance of $1,080 would be recorded as a liability until it is paid off in 30 days. Overall, there is a net increase in assets of $1,080, which is reflected on the balance sheet.

Al Dunn Bakery Bought a New Oven for $1,380