Question

The bookkeeper for Wood Mfg. made the following journal entry on January 30, 2009:

LAND: DEBIT 201,500
BUILDING: DEBIT 84,500
CASH: CREDIT 65,000
NOTE PAYABLE: CREDIT 221,000

Before the journal entry above, Wood had assets, liabilities, and owners' equity of $450,000, $100,000, and $350,000, respectively. What are total assets immediately after the above transaction occurs?

Answer 1

After Wood Manufacturing's transaction of acquiring land and a building, financed through a mix of cash and a note payable, the total assets amount to $736,000.

Step-by-step explanation:

The transaction described involves Wood Manufacturing acquiring land and a building, and financing it through a combination of cash payment and a note payable. Post the transaction, to calculate total assets, we need to consider all assets before and after the transaction.

Before the journal entry, Wood's total assets were $450,000. The new assets acquired are land ($201,500) and building ($84,500), which amount to a combined total of $286,000. To find out the total assets after the transaction, we add the new assets to the original assets:

$450,000 + $201,500 (land) + $84,500 (building) = $736,000

Thus, after the acquisition and considering both the cash outlay and the note payable, the total assets immediately after the transaction would amount to $736,000.