Liabilities Liabilities are referred to as the obligations of the business towards the creditors for operating the business. Liabilities may be short-term or long-term depending upon the time duration in which it is paid back to the creditors. Rules of debit and credit: “An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited. Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”. 1. To Journalize: The Company’s purchase of merchandise inventory on December 31, 2017

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Chapter 11, Problem 11.4SE

1.

To determine

Liabilities

Liabilities are referred to as the obligations of the business towards the creditors for operating the business. Liabilities may be short-term or long-term depending upon the time duration in which it is paid back to the creditors.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

1.

To Journalize: The Company’s purchase of merchandise inventory on December 31,

2017

2.

To determine

To Journalize: The Company’s accrual interest expense as on June 30, 2018.

3.

To determine

To Journalize: The Company’s payment of note payable plus interest on December 31, 2018.

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