Question: a.) What is the correct journal entry for the following transaction? A firm sells a car for $40 cash. The cost of the car is

a.) What is the correct journal entry for the following transaction?

A firm sells a car for $40 cash. The cost of the car is $30.

The firm is a car dealer, and the car is therefore classified as inventory.

b.) Describe the effect of the following transaction on owners' equity (increase, decrease, or no effect):

Purchase of stock of another company as an investment.

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