Question 1: A company purchases inventory worth $10,000 on credit from a supplier. Requirements:

1. Record the journal entry to recognize the purchase of inventory.
2. Post the journal entry to the Inventory account in the ledger.
3. Explain how this transaction impacts the balance sheet.
4. Analyze the effect of this transaction on the company's liquidity ratio.
5. Discuss the implications of purchasing inventory on credit for the company's cash flow.