Effect of a Credit Collection on Financial Statements
On July 25, Lucky Tee, a custom apparel manufacturer, collected the balance owed from a customer from a prior month sale “on account.” This transaction affected the apparel company's financial statement elements as follows:
Assets and liabilities increased.
Assets and liabilities decreased.
Assets and owner’s equity increased.
Assets and owner's equity decreased.
Liabilities decreased and owner's equity increased.
Lucky Tee's financial statement elements were not impacted by this transaction.