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Assume that Kilgore Realty, Inc., borrowed $80,000 from First City Bank and Trust. In recording the transaction, Kilgore erroneously recorded the receipt of $80,000 as an increase in cash, $80,000, and an increase in fees earned, $80,000.
(a) How would this error affect the equality of the accounting equation?
(b) How would this error affect the income statement, retained earnings statement, balance sheet, and statement of cash flows?
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