Please give correct answer and explain how you got that answer. I chose C) and got 1/2 credit for it being partially correct but I\'m unsure as to why. Thank you! Assume that Red Door boutique sold additional watches to a department store on account for $58,000. How would this transaction effect red doors accounting equation? A) increase both assets and liabilities by 58,000 B) increase both assets and equity by 58,000 C) increase both liabilities and equity by 58,000 D) No effect because it cancels out Solution Selling watches on account would result in the following transaction: Accounts Receivable $58,000 Sales Revenue $58,000 Selling would not increase liabilities at all. The debit to A/R would increase assets by $58,000 and the credit to Sales Revenue would flow through the income statement to net income, which would increase Equity by $58,000. The answer is (B.) Increase both assets and equity by 58,000 .

1. Please give correct answer and explain how you got that answer. I chose C) and got 1/2 credit for
it being partially correct but I'm unsure as to why. Thank you!
Assume that Red Door boutique sold additional watches to a department store on account for
$58,000. How would this transaction effect red doors accounting equation?
A) increase both assets and liabilities by 58,000
B) increase both assets and equity by 58,000
C) increase both liabilities and equity by 58,000
D) No effect because it cancels out
Solution
Selling watches on account would result in the following transaction:
Accounts Receivable $58,000
Sales Revenue $58,000
Selling would not increase liabilities at all. The debit to A/R would increase assets by $58,000
and the credit to Sales Revenue would flow through the income statement to net income, which
would increase Equity by $58,000. The answer is (B.) Increase both assets and equity by 58,000