Alpha Company has assets of $610,000, liabilities of $255,000, and equity of $355,000. It buys office equipment on credit for $80,000. What would be the effects of this transaction on the accounting equation

Both assets and liabilities increase by $80,000

Explanation:

To start with, it is imperative to show the equation before and after the purchase of equipment on credit

Assets = Equity + liabilities

$610,000 = $255,0000 + $355,000

The equipment's purchase would increase the value of assets and liabilities by $80,000

Assets = Equity + liabilities

$610,000+$80,000=$255,000 + ($355,000+$80,000)

$690,000 = $255,000 + $435,000