If a Hurko, Inc. paid $38,000 of its accounts payable in cash, what was the effect...
If a Hurko, Inc. paid $38,000 of its accounts payable in
cash, what was the effect on the assets, liabilities and
shareholder’s equity?
A. Assets would decrease $38,000, liabilities would decrease
$38,000, and equity would decrease $38,000.
B. Assets would decrease $38,000, liabilities would decrease
$38,000, and equity would increase $38,000.
C. Assets would decrease $38,000, liabilities would decrease
$38,000, and equity would not change.
D. There would be no effect on the accounts because the accounts
are affected by the same amount.
E. None of the above; __________.
Homework Answers
Journal:
Accounts payable a/c....Dr $38000
To Cash $38000
Hence liabilities would decrease by $38,000 and total assets decrease by $38,000 while there is no change in equity.
Hence the correct option is C.
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