Question

Purchasing a building for $ 105 comma 000 by paying cash of $ 25 comma 000 and signing a note payable for $ 80 comma 000 will A. decrease total assets and increase total liabilities by $ 25 comma 000. B. increase both total assets and total liabilities by $ 105 comma 000. C. increase both total assets and total liabilities by $ 80 comma 000. D. decrease both total assets and total liabilities by $ 25 comma 000.

Answer 1

C. increase both total assets and total liabilities by $ 80,000.

Step-by-step explanation:

Before the purchase:

Cash $25,000

Net Actives: $25,000

After the purchase:

Buildings $105,000

Notes Payable $80,000

Net Actives: $25,000

The total increase of the total active comes with an increase in the debts too, both in 80,000.