Deano Inc. purchased $27,000 of merchandise from Jeri Co. by making a 25 percent cash down payment and signing a 90-day note for the balance. The cost of the merchandise to Jeri Co. was $22,000. The entry by Deano Inc. to record the transaction would

Question

Quizplus · Accepted Answer

The purchase of merchandise would increase the total assets of Deano Inc. Since they made a cash down payment, both cash and inventory (merchandise) would be recorded as assets. The liabilities would stay the same until the 90-day note is due, and owners' equity is not affected by this transaction.

Deano Inc Purchased $27,000 of Merchandise from Jeri Co