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The Kennedy Company sold the land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What are the effect of the sale and the payoff of the loan on the accounting equation? 1. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $5,000 2. assets increase by $5,000; liabilities decrease by $15,000; owner's equity increases by $20,000 3. assets increase by $60,000; liabilities decrease by $15,000; owner's equity increases by $20,000 4. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $35,000

The Kennedy Company sold the land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What are the effect of the sale and the payoff of the loan on the accounting equation? 1. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $5,000 2. assets increase by $5,000; liabilities decrease by $15,000; owner's equity increases by $20,000 3. assets increase by $60,000; liabilities decrease by $15,000; owner's equity increases by $20,000 4. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $35,000

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 5PA: Jada Company had the following transactions during the year: Purchased a machine for $500,000 using...
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The Kennedy Company sold the land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What are the effect of the sale and the payoff of the loan on the accounting equation? 1. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $5,000 2. assets increase by $5,000; liabilities decrease by $15,000; owner's equity increases by $20,000 3. assets increase by $60,000; liabilities decrease by $15,000; owner's equity increases by $20,000 4. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $35,000
Transcribed Image Text:The Kennedy Company sold the land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What are the effect of the sale and the payoff of the loan on the accounting equation? 1. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $5,000 2. assets increase by $5,000; liabilities decrease by $15,000; owner's equity increases by $20,000 3. assets increase by $60,000; liabilities decrease by $15,000; owner's equity increases by $20,000 4. assets increase by $20,000; liabilities decrease by $15,000; owner's equity increases by $35,000
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