Effect of a Vendor Payment on Financial Statements
On July 12, Lucky Tee, a custom apparel manufacturer, paid $300 owed to vendors for prior purchases of blank t-shirts (inventory) made 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.