# finance

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I have worked and worked on this problem and came up with 2 different answers for b. and now am unsure of my answer for a.

Problem 2:
For each journal entry, prepare an explanation of the business event that is being
represented:

a. Loan payable \$57,000
Cash \$11,400 Inventory \$45,600

b. Accounts payable \$13,450
Cash \$13,450

a. The company borrowed \$57,000 from a bank. \$45,600 of this was used to purchase inventory. An increase in cash Assets and an increase in Liabilities is the result.
b. The company purchased \$13,450 worth of inventory on credit (will pay later). The inventory is resold at a later date. This causes an increase in Assets and in Liabilities.
b. Paid \$13,450 for items previously purchased on account. This causes a decrease in Assets and in Liabilities and no change to Equity. (From Chapter 3, p. 94)

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