The Accounting Equation for Mickey Enterprises

Homework 3
Name
Institution/ Affiliation
Questions
1.The accounting equation for Mickey Enterprises is as follows:
Assets

=

Liabilities

+

Stockholders' Equity

$360,000

=

$180,000

+

$180,000

If the company now purchases a truck on account for $30,000, the accounting equation will change to:
AssetsLiabilities Stockholders' Equity
* $390,000 = $180,000 + $210,000
* $390,000 = $198,000 + $192,000
* $390,000 = $210,000 + $180,000
* $360,000 = $180,000 + $180,000
The correct answer is C. Rationale; the assets and liabilities increases since the truck is bought on credit.
2.The accounting equation for Minnie Enterprises is as follows:
Assets

=

Liabilities

+

Stockholders' Equity

$1,080,000

=

$540,000

+

$540,000

If the company now purchases a truck on account for $90,000, the accounting equation will change to:
AssetsLiabilities Stockholders' Equity
* $1,170,000 =$540,000 +$630,000
* $1,170,000 =$594,000 +$576,000
* $1,170,000 =$630,000+ $540,000
* $1,080,000 =$540,000+ $540,000
The correct answer is C. Rationale; the assets and liabilities increases since the truck is bought on credit.
3.The accounting equation for Goofy Enterprises is as follows:
Assets

=

Liabilities

+

Stockholders' Equity

$240,000

=

$120,000

+

$120,000

If the company now issues stock for $30,000, the accounting equation will change to:
AssetsLiabilities Stockholders' Equity
* $240,000= $ 90,000 + $150,000
* $270,000= $150,000 + $120,000
* $240,000= $150,000 +$ 90,000
* $270,000= $120,000 + $150,000
The correct answer is D. When the company issues stock, the cash it receives increases its assets. Since the stakeholder’s equity is a difference between assets and liabilities, the equity increases in an equal measure.
4.The accounting equation for Pinto Company is as follows:
Assets

=

Liabilities

+

Stockholders' Equity

$720,000

=

$360,000

+

$360,000

If the company now issues stock for $90,000, the accounting equation will change to:
AssetsLiabilities Stockholders' Equity
* $720,000 = $270,000 + $450,000
* $810,000 = $450,000 + $360,000
* $720,000 = $450,000 + $270,000
* $810,000 = $360,000 + $450,000
The correct answer is D. If the company issues stock worth $90,000, the asse...