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What is the net impact of these transactions

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Question - Comfy Home is a retail business selling a broad range of homeware, kitchen, and electrical appliances to consumers and small businesses. In addition to the home and kitchen appliances, Comfy Home makes and sells home decorating items including artisanal candles and holiday arrangements. The company has two stores located in the small city of Warmtown, USA. Its downtown store offers decorating services to the banks and small businesses in the vicinity. Tenisa Singh handles the candle making and decorating side of the business while Randolf Singh manages the stores. The business is wholly owned by Tenisa and Randolf Singh and was started by the couple in 2014. Comfy Home uses US GAAP for accounting purposes.

In the first month of business, Randolf and Tenisa set up their store. Comfy Home purchased and installed $130,000 of furniture and fixtures, which was paid for with cash. Comfy Home also purchased $65,000 of inventory on credit. What is the net impact of these transactions on the liabilities portion of the accounting equation?

A. Increase $65,000

B. Decrease $130,000

C. Increase $195,000

D. No net impact

Reference no: EM132820802

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