January 1

The corporation received $1,000,000 in cash in exchange for stock issued to stockholders.

January 3

The corporation borrowed $250,000 from a bank. The loan is a four-year loan with an interest rate of 12 percent, payable each year on January 1 beginning in year 2.

January 5

The corporation purchased equipment to be used in the business for $200,000 cash.

January 8

The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers.

January 15

The corporation hired five employees. Each employee will be paid $1,000 at the end of each month

January 30

The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1.

What will be the impact of the January 8 event on the companys balance sheet on the date?

A. Inventory will increase $120,000, and cash will decrease $120,000.

B. Inventory will increase $120,000, cash will decrease $120,000, and accounts payable will decrease $80,000

C. Inventory will increase $200,000, cash will decrease $120,000, and accounts payable will increase $80,000

D. Inventory will increase $200,000, cash will decrease $120,000, and accounts receivable will increase $80,000