Question : 131. Land, originally purchased for $20,000, sold for $75,000 in cash. : 1233758

131. Land, originally purchased for $20,000, is sold for $75,000 in cash. What is the effect of the sale on the accounting equation? 
A. assets increase $75,000; stockholders’ equity increases $75,000
B. assets increase $55,000; stockholders’ equity increases $55,000
C. assets increase $75,000; liabilities decrease $20,000; stockholders’ equity increases $55,000
D. assets increase $20,000; no change for liabilities; stockholders’ equity increases $75,000

132. The Kennedy Company sold 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 is the effect of the sale and the payoff of the loan on the accounting equation? 
A. assets increase $20,000; liabilities decrease $15,000; stockholders’ equity increases $5,000
B. assets increase $5,000; liabilities decrease $15,000; stockholders’ equity increases $20,000
C. assets increase $60,000; liabilities decrease $15,000; stockholders’ equity increases $20,000
D. assets increase $20,000; liabilities decrease $15,000; stockholders’ equity increases $35,000

133. On November 1 of the current year, the assets and liabilities of Jim Chu, M.D., are as follows: Cash, $10,000; Accounts Receivable, $8,200; Supplies, $1,050; Land, $25,000; Accounts Payable, $6,530. What is the amount of stockholders’ equity as of November 1 of the current year? 
A. $37,720
B. $44,430
C. $21,500
D. $50,780

134. Al Shea is a stockholder and operator of SawTooth Company. As of the end of its accounting period, December 31, 2007, SawTooth Company has assets of $925,000 and liabilities of $285,000. During 2008, Al Shea invested an additional $50,000 in exchange for capital stock and was paid dividends in the amount of $30,000 from the business. What is the amount of net income during 2008, assuming that as of December 31, 2008, assets were $980,000, and liabilities were $255,000? 
A. $ 95,000
B. $ 65,000
C. $165,000
D. $725,000

135. The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the stockholders were paid dividends in the amount of $50,000 and had made an additional investment of $35,000 in the business.
 

Assets

Liabilities

Beginning of year

$295,000

$190,000

End of year

355,000

220,000

The amount of net income for the year was 
A. $85,000
B. $40,000
C. $135,000
D. $45,000

136. If stockholders’equity at the beginning of the period was $65,000, ending balance is $43,000, and the dividends were paid in the amount of $16,000, the amount of net income or net loss was 
A. net income of $37,000
B. net income of $8,000
C. net loss of $22,000
D. net loss of $6,000

137. Transactions affecting stockholders’ equity include 
A. stockholders’ investments and payment of liabilities
B. stockholders’ investments and dividends, revenues, and expenses
C. stockholders’ investments, revenues, expenses, and collection of accounts receivable
D. dividends, revenues, expenses, and purchase of supplies on account

138. Rudy River is starting his computer repair business and has deposited in initial investment of $10,000 into the business cash account in exchange for capital stock. Identify how the accounting equation will be affected. 
A. Increase Assets (Cash) and increase Liabilities (Accounts Payable)
B. Increase Assets (Cash) and increase Assets (Accounts Receivable)
C. Increase Assets (Accounts Receivable) and decrease Liabilities (Accounts Payable)
D. Increase Assets (Cash) and increase Stockholders’ Equity (Capital Stock)

139. Rivers Computer Makeover Company purchased $15,000 of Computer and Office Equipment. The company paid $3,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in six monthly installments. How will this transaction affect the accounting equation? 
A. Increase Assets (Computer and Office Equipment $15,000) and decrease Liabilities (Accounts Payable $15,000)
B. Increase Total Assets by a net amount of $12,000 (increase Computer and Office Equipment $15,000 and decrease Cash $3,000) and increase Liabilities (Notes Payable $12,000)
C. Increase Total Assets by a net amount of $15,000 (increase Computer and Office Equipment $12,000 and increase Cash $3,000) and decrease Liabilities (Accounts Payable $15,000)
D. Increase Assets (Computer and Office Equipment $12,000) and increase Liabilities (Accounts Payable $12,000)

140. Rivers Computer Makeover Company purchased various computer supplies on account to be used for repairing their customers’ computers. How will this business transaction affect the accounting equation? 
A. Increase Assets (Supplies) and decrease Assets (Cash)
B. Increase Assets (Supplies) and Increase Liabilities (Accounts Payable)
C. Increase Assets (Supplies) and decrease Stockholders’ Equity (Supplies Expense)
D. Increase Stockholders’ Equity (Supplies Expense) and increase Liabilities (Accounts Payable)