Wyatt Company was formed on January 1, Year 1, when it acquired $50,000 cash from issuing common stock. Which of the following shows the impact of this transaction on Wyatt's accounting equation? $\begin{array}{ccccc}
\text { Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity } \
\end{array}$
A.
$\begin{array}{llcc}
&+/-&&&& \text {n/a }&&&&&& \text {n/a } \
\end{array}$

B.
$\begin{array}{llcc}
&+&&&&& \text {n/a } &&&&&&&+ \
\end{array}$

C.
$\begin{array}{llcc}
&-& &&&& \text { n/a } &&&&&&&-\
\end{array}$

D.
$\begin{array}{llcc}
&+&&&&&&+&&&&&&& \text {n/a } \
\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question

Wyatt Company was formed on January 1, Year 1, when it acquired $50,000 cash from issuing common stock. Which of the following shows the impact of this transaction on Wyatt's accounting equation? $\begin{array}{ccccc}
  \text {  Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity }  \
\end{array}$ 
A.
$\begin{array}{llcc}
&+/-&&&&  \text {n/a  }&&&&&&  \text {n/a  }  \
\end{array}$

B.
$\begin{array}{llcc}
&+&&&&&  \text {n/a  } &&&&&&&+ \
\end{array}$
 
C.
$\begin{array}{llcc}
 &-& &&&&  \text { n/a } &&&&&&&-\
\end{array}$

D.
$\begin{array}{llcc}
&+&&&&&&+&&&&&&&  \text {n/a  } \
\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Quizplus · Accepted Answer

Option B correctly shows the impact of the transaction on Wyatt's accounting equation. The issuance of common stock increases the assets (cash) and the equity (common stock) by the same amount, which is $50,000 in this case. Options A, C, and D do not balance the accounting equation properly. Option A shows an increase in assets but no increase in equity, which violates the accounting equation (Assets = Liabilities + Equity). Option C shows an increase in both assets and liabilities, which also violates the accounting equation. Option D shows an increase in liabilities but no increase in assets or equity, which again violates the accounting equation.

Wyatt Company Was Formed on January 1, Year 1, When Assets= Liabilities+ stockholcers ′ equity \begin{array}{ccccc} \text { Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity } \\\end{array} Assets​=​ Liabilities​+ stockholcers ′ equity ​

Wyatt Company Was Formed on January 1, Year 1, When $\begin{array}{ccccc} \text { Assets} &=& \text { Liabilities} & + \text { stockholcers }{ }^{\prime} \text { equity } \\\end{array}$