For merchandising businesses, the term purchases refers only to ...

[Mr3Hunna]

For merchandising businesses, the term purchases refers only to merchandise acquired for resale.
 a. True
   b. False
   Indicate whether the statement is true or false

Question 2

On July 1, 2012, Homer, Inc. loaned a customer 10,000 on a 3-month, 9 note.
 
  Part A: Show the effect on the accounting equation of the July 31, 2012 adjusting entry for interest. Include both account titles and amounts.
   Shareholders' equity
  Assets Liab. CC Retained earnings
 
  Part B: Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.
 
  ______ Income Statement ______ Statement of Changes in Shareholders' Equity
  ______ Statement of Cash Flows ______ Balance Sheet
 
  Part C: Would your answer in Part A be different if the note were a 10,000, 6-MONTH, 9 note, instead of a 3-month note?

[dominiqueenicolee]

Answer to Question 1

True

Answer to Question 2

Part A:
Shareholders' equity
Assets Liab. CC Retained earnings
75 Interest receivable 75 Interest revenue

Part B:

___X___ Income Statement ___X___ Statement of Changes in Shareholders' Equity
_______ Statement of Cash Flows ___X___ Balance Sheet

Part C: No

[Mr3Hunna]

Thanks for the timely response, appreciate it

[LegendaryAnswers]

Excellent