Sharon Foods Company reported the following transactions for September 2017. a) The business received a $21,000 cash contribution from the owner. It was credited to Sharon, Capital. b) The business purchased office equipment for $9,000 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 $800 cash. e) Paid $1,600 cash for September rent. f) The business had sales of $12,000 in September. Of these sales, 40% were cash sales, and the balance was credit sales. g) The business paid $8,000 cash for office furniture. What are the total liabilities at the end of September, 2017

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Business

Sabrina

19 November, 02:39

Sharon Foods Company reported the following transactions for September 2017. a) The business received a $21,000 cash contribution from the owner. It was credited to Sharon, Capital. b) The business purchased office equipment for $9,000 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 $800 cash. e) Paid $1,600 cash for September rent. f) The business had sales of $12,000 in September. Of these sales, 40% were cash sales, and the balance was credit sales. g) The business paid $8,000 cash for office furniture. What are the total liabilities at the end of September, 2017

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Kim · Answer 1

The total liabilities at end of September is $5,000

Explanation:

The $21,000 received from business owner is capital which would have been credited to capital and debited to cash.

The purchase of office equipment meant that cash decreased by $4000, a credit of $4,000 and a credit of $5,000 to notes payable while the $9000 is debited to equipment account.

The insurance expense, utility bill, rent as well as the purchase of office furniture were all cash settled and had no liability impact, hence the only liability outstanding at month end is the notes payable on office equipment of $5,000