The following are selected 2017 transactions of Blue Corporation. Sept. 1 Purchased inventory from Encino Company on account for $65,800. Blue records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $65,800, 12-month, 7% note to Encino in payment of account. This means Blue turned the A/P balance into a Note Payable.

Required:
a. Prepare the necessary journal entries
b. Prepare adjusting entries at December 31.
c. c. Compute the total net liability.

Blue Corporation

a. Journal Entries:

Sept. 1 Debit Purchases $65,800

Credit Accounts payable (Encino Company) $65,800

To record the purchase of goods on account.

Oct. 1 Debit Accounts payable (Encino Company) $65,800

Credit 7% Note payable (Encino Company) $65,800

To record the issue of a 12-month note payable.

b. Adjusting Journal Entry:

Dec. 31: Debit Interest expense $1,151.50

Credit Interest payable $1,151.50

To record interest expense for the quarter.

c. Total net liability:

7% Note payable (Encino Company) $65,800

Interest payable                                      $1,151.50

Total net liability                                 $66,951.50

Explanation:

a) Data and Analysis:

Sept. 1 Purchases $65,800 Accounts payable (Encino Company) $65,800

Oct. 1 Accounts payable (Encino Company) $65,800 7% Note payable (Encino Company) $65,800

Dec. 31: Interest expense $1,151.50 Interest payable $1,151.50

net worth is the difference between what you own and what you have. if you exceed your liabilities you have a positive net worth. if your liabilities are greater than your assets you have a negative net worth. its a snapshot of your financial situation. if you calculate your net worth you will see the end result of everything you've earned and spent as of now. net worth statements and all you asked of can you determine where you are, how to get where you want to be, if your spending   to much. honestly it can tell you a lot of things. i can go on, but you can paint the picture from here.

explanation: