During January, Wells Corporation purchased $100,000 of inventory; they paid one-fourth in cash, and signed a note for the remaining balance.
This transaction will have the following effect on the accounting equation:
A) Increase Inventory 100,000; decrease Cash 75,000; increase Notes Payable 25,000
B) Increase Inventory 100,000; decrease cash 25,000; increase Accounts Payable 75,000
C) Increase Inventory 100,000; increase Accounts Payable 25,000; decrease Cash 75,000
D) Increase Inventory 100,000; decrease Cash 25,000; increase Notes Payable 75,000

Question

Quizplus · Accepted Answer

The transaction increases Inventory by $100,000, decreases Cash by $25,000 (one-fourth of $100,000), and increases Notes Payable by $75,000 (the remaining balance).

During January, Wells Corporation Purchased $100,000 of Inventory; They Paid