A corporation purchased a $40,000 delivery truck by paying $4,000 cash and signing a $36,000 note payable.Immediately prior to this transaction the corporation had assets,liabilities,and owners' equity in the amounts of $75,000,$52,000,and $23,000 respectively.What is the total amount of the corporation's assets after this transaction has been recorded?

Question

Quizplus · Accepted Answer

The corporation purchased a $40,000 delivery truck by paying $4,000 cash and signing a $36,000 note payable.

This means that the corporation's assets increase by the value of the truck, $40,000, and the liabilities increase by the amount of the note payable, $36,000.

Before the transaction: 
Total assets = $75,000 
Total liabilities = $52,000

After the transaction: 
Total assets = $75,000 + $40,000 - $4,000 = $111,000 (assets increase by $40,000, and cash decreases by $4,000) 
Total liabilities = $52,000 + $36,000 = $88,000 (liabilities increase by $36,000)

The owners' equity is not affected by this transaction, so it remains at $23,000.

Therefore, the total amount of the corporation's assets after this transaction has been recorded is $111,000.

The correct choice is B.

A Corporation Purchased a $40,000 Delivery Truck by Paying $4,000