Indicate how each event affects the elements of the financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. Increase = IDecrease = DNo Effect = NA(Note that "No Effect" means that the event either does not affect the element of the financial statements or that the event causes an increase in that element and is offset by a decrease in that same element.) Allen Co. purchased a $30,000 machine by making a $5,000 cash down payment and issuing a $25,000 note payable for the remaining balance.AssetsLiabilitiesStk. EquityRevenuesExpensesNetStmt. of ?IncomeCash Flows???????
What will be an ideal response?
(I) (I) (NA) (NA) (NA) (NA) (D)
The purchase increases assets (machine) and decreases assets (cash), for a net increase in assets. It also increases liabilities (notes payable). The cash outflow is reported as an investing activity on the statement of cash flows.
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