Rosewood Company purchased land for $140,000 by making a cash payment of $36,000 and promising to pay the remaining amount in a later accounting period.What is the net effect of this transaction on Rosewood's accounting equation?

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The land purchase increases assets (land) by $140,000. Cash, an asset, decreases by $36,000, but a liability (the promise to pay the remaining $104,000) increases by $104,000. The net effect is an increase in assets by the value of the land minus the cash paid ($140,000 - $36,000 = $104,000 increase in assets due to the land, offset by the decrease in cash), and an increase in liabilities by $104,000, the amount still owed.

Rosewood Company Purchased Land for $140,000 by Making a Cash