+1 D Purpose Upon completing this project, you will better understand liabilities and their role in the bookkeeping process. Steps for Completion 1. Bernie's Better Bikes sells the best motorcycles in town. Bernie and his brother Ted own the store, and Ted's wife Betty is the bookkeeper. Ted went to a convention and placed an order with Powerful Zooms for $200,000 worth of the latest electric motorcycles to be delivered in January. He agreed to pay for them by February 15. What type of account will Betty create to record the new debt? Will this be a current or long-term liability? a Objectives covered 3 Liabilities, Equity, and Purchase Transactions 3.1 Summarize liabilities and purchase transactions 3.1.1 Define liabilities and identify natural account balance 3.1.2 Differentiate between current and long-term liabilities 3.1.3 Identify the financial statements on which liabilities appear b. 2. Bernie explains that purchases need to follow the proper business plan. Bernie's Better Bikes doesn't pay upfront for inventory, they pay as the bikes are sold. Betty calls Powerful Zooms to discuss the agreement. Powerful Zooms offers to cancel the order, but they cannot agree to different terms. Bernie and Ted agree to keep the order because electric motorcycles will be all the rage this season. Bernie is concerned about the effect of this transaction on the company's financial health. What report can Betty offer him to show the company's current standing? What impact will the changes have on the report? a. Report: b. Assets: c. Liabilities: d. Owner's equity 4