Question

Watson Foods, Inc. reported the following transactions for September 2019.
a) The business received $21,000 cash and issued common stock. It was credited to Common Stock
b) The business purchased office equipment for $10,000 for which $4,000 cash was paid and the balance was put on a note payable.
c) Paid insurance expense of $1,500 cash.
d) Paid the September utility bill for $900 cash.
e) Paid $1,800 cash for September rent. The business had sales of $11,000 in September. Of these sales, 60% were cash sales, and the balance was credit sales.
f) The business paid $6,000 cash for office furniture.
What are the total liabilities at the end of September, 2019 ?
(a) $1,500
(b) $11,000
(c)$10,000
(d) $6,000

Answer 1

Answer:

(d) $6,000

Explanation:

The computation of the total liabilities is shown below:

Total liabilities = Office equipment purchased - cash paid

                       = $10,000 - $4,000

                       = $6,000

The remaining amount would reflect the note payable which is come under the liabilities accounts which is shown in the balance sheet.

The other information which is given in the question is not related to the liabilities account. Hence, we ignored it.