Question

Maso Company recorded journal entries for the issuance of common stock for $160,000, the payment of $52,000 on accounts payable, and the payment of salaries expense of $84,000. What net effect do these entries have on owners' equity?

Answer 1

The correct answer is that the owners equity would increase by $76,000.

Step-by-step explanation:

here we have been given 3 entries and in these three journal entries , the payment of $52,000 on account payable is a entry which will have no effect on the owners equity, so only issuance of stock which increase the owners equity and payment of salary expenses which decreases the owners equity will have a impact on its total equity.

The total impact on owners equity -

ISSUANCE OF COMMON STOCK = $160,000

(-) PAYMENT OF SALARY = $84,000

net effect on owners equity which is here increase in the total equity by $76,000.