Updating the accounting equation for purchases with trade discount Steps: - Start with original equation: Assets $48,000 = Liabilities$8,000 + Capital $40,000 (balances as$8,000 + $40,$48,000; bank 4,000 by cheque increases inventory 4,000; net assets unchanged at 4,000 less 25% trade discount (3,000; increases inventory 51,000) and increases liabilities 11,000); capital unchanged at 51,000 = 40,000. Why C is correct: - Trade discount reduces recorded purchase cost to net amount per accounting rules, increasing assets and liabilities by 9,000 ignores total assets and misapplies transactions; equation doesn't balance (39,000 = 50,000 understates asset increase (should be +2,000); equation doesn't balance (40,000 = $51,000). - D: Identical to C, but listed separately …