Exeter Company sold merchandise for $10,000 cash.The merchandise had cost the company $4,500.What is the effect of the sale on the balance sheet?

Question

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This transaction will increase assets (cash)by $10,000 and decrease assets (inventory)by $4,500.It will also increase stockholder's equity (retained earnings)by $5,500.It will increase revenue by $10,000,increase expenses (cost of goods sold)by $4,500,and increase net income by $5,500 (or $10,000 - $4,500).

Exeter Company Sold Merchandise for $10,000 Cash