QuestionMay 28, 2025

If a company issues common stock for 40,000 and issues a note payable for 30,000 the company's total equity will increase by 40,000 total assets will increase by 40,000 total liabilities will decrease by 30,000 total equity will increase by 70,000 total liabilities will increase by 40,000

If a company issues common stock for 40,000 and issues a note payable for 30,000 the company's total equity will increase by 40,000 total assets will increase by 40,000 total liabilities will decrease by 30,000 total equity will increase by 70,000 total liabilities will increase by 40,000
If a company issues common stock for 40,000 and issues a note payable for 30,000 the company's total equity will increase by 40,000 total assets will increase by 40,000 total liabilities will decrease by 30,000 total equity will increase by 70,000 total liabilities will increase by 40,000

Solution
4.4(248 votes)

Answer

Total equity will increase by 40,000. ### Total assets will increase by 70,000. ### Total liabilities will increase by 30,000. Explanation 1. Analyze the issuance of common stock Issuing common stock increases total equity by the amount received, which is 40,000. 2. Analyze the issuance of a note payable Issuing a note payable increases total liabilities by the amount of the note, which is 30,000. 3. Calculate the increase in total assets Both transactions increase total assets. Common stock issuance adds 40,000 and note payable adds 30,000, totaling an increase of 70,000.

Explanation

1. Analyze the issuance of common stock<br /> Issuing common stock increases total equity by the amount received, which is $40,000.<br /><br />2. Analyze the issuance of a note payable<br /> Issuing a note payable increases total liabilities by the amount of the note, which is $30,000.<br /><br />3. Calculate the increase in total assets<br /> Both transactions increase total assets. Common stock issuance adds $40,000 and note payable adds $30,000, totaling an increase of $70,000.
Click to rate:

Similar Questions