We like to rock (wlr), a granite countertop manufacturer, delivered 5 countertops at $2,000 each to their client. the cost of producing the countertops was $500 each. the client paid cash for the countertops. first, how would the revenue from this transaction impact the accounting equation for wlr?

It increase the stockholders equity by 7,500 which is the gain for the sale of the countertops.

It also increase Assets by 7,500

Explanation:

the accounting equation before the sales had inventory for 500 each

this inventory, the countertops are sold by 2,000 each

each countertop sold generates a revenue for 2,000

and a cost of goods sold associate with the sale for 500

This increase the Equity of the firm WLR by 1,500 for each countertop

In this case the sale is for 5 countertops

so it will be: 1,500 x 5 = 7,500

This will be an explanation with numbers:

Assets                  =   Liability +          Equity

Inventory                                     Common stock

5 x 500=2,500    =                          2,500

After the sale:

Assets                        =   Liabily       +                    Equity

Cash                                                      (CS +  Revenue -  COGS)

5 x 2,000 = 10,000     =       0         +    2,500     10,000   (2,500)

         10,000               =      0           +         10,000

Resuming:

It increase the stockholders equity by 7,500 which is the gain for the sale of the countertops. And assets for the same amount

The solution of the given query is provided below in the explanation segment.

Explanation:

(a)

The diagram according to the given query is attached below.

(b)

Given:

Investor sells,

= 200 shares

at,

= $5.25

Strike price,

= $5

Premium,

= $0.50

If the price is less than $5 is $.75 per share,

The investor's gain will be:

=

= ($)

(c)

The investor would earn under $5.25 upon expiry, as longer as the spot price becomes less.