On 1 May, Tom sold an old motor vehicle that had a net book value of $10000 to Arnold for $12000. Arnold paid $7500 by cheque and accepted that the remaining amount would be settled by instalments. What was the net effect of these transactions on Arnold’s accounting equation on 1 May?
- Aassets increase $2500; liabilities increase $2500; owner’s equity no effect
- Bassets increase $2500; liabilities increase $4500; owner’s equity decrease $2000
- Cassets increase $4500; liabilities increase $2500; owner’s equity increase $2000
- Dassets increase $4500; liabilities increase $4500; owner’s equity no effect