Presented below are a number of facts related to R. Kelly, Inc. Assume that the company did not mention these facts in the financial statements and the related notes.

Instructions
Assume that you are the auditor of R. Kelly, Inc. and that you have been asked to explain the appropriate accounting and related disclosure necessary for each of these items.
(a) The company decided that, for the sake of conciseness, it would report only net income on the income statement. Details as to revenues, cost of goods sold, and expenses were omitted.
(b) Equipment purchases of $170,000 were partly financed during the year through the issuance of a $110,000 note payable. The company offset the equipment against the note payable and reported plant assets at $60,000.
(c) R. Kelly has reported its ending inventory at $2,100,000 in the financial statements. No other information related to inventories is presented in the financial statements and related notes.