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The following entry appears in Galloway Paints general journal on April 23,2018:

-Before the journal entry above,Galloway had assets of $450,000;liabilities of $230,000;and owners' equity of $220,000.Total assets immediately after the above transaction has been recorded amount to:
A)$430,000.
B)$450,000.
C)$470,000.
D)$476,000.

Question

[The following information applies to the questions displayed below.]
The following entry appears in Galloway Paints general journal on April 23,2018:
 
-Before the journal entry above,Galloway had assets of $450,000;liabilities of $230,000;and owners' equity of $220,000.Total assets immediately after the above transaction has been recorded amount to:
A)$430,000. 
B)$450,000. 
C)$470,000. 
D)$476,000.

Quizplus · Accepted Answer

The journal entry does not provide any information about the effect on assets or liabilities. Therefore, the total equity before and after the transaction will remain the same. The $26,000 increase in owners' equity due to the issuance of common stock will be offset by a corresponding increase in cash, resulting in total assets of $470,000 ($450,000 + $26,000 - $6,000 - $230,000 = $240,000).

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