Question

XYZ Company began operations in May, 2022 by selling common stock to
owners in exchange for $90,000 cash. During 2022, ABC Company entered
into the following transactions:

1.  On May 23, ABC Company purchased inventory for $50,000 cash.

2.  On June 1, ABC Company purchased a three-year insurance policy
    for $32,400 cash.

3.  On July 1, ABC Company received $49,000 cash from a customer
    for services to be performed over the next 8 months.

4.  On August 1, ABC Company purchased equipment costing $60,000 by
    paying $20,000 in cash and agreeing to pay the remainder within
    six months. The equipment was given a 10-year life and a $4,200
    residual value.

5.  On August 18, ABC Company sold one-half of the inventory that
    was purchased on May 23 to a customer for $44,000 cash.

Calculate the amount of total liabilities that ABC Company would
report in its December 31, 2022 balance sheet after all the above
transactions are recorded and all necessary adjusting entries are
made and posted. 

Answer 1

Solution:

Amount of total liabilities that ABC company would report in its Dec 31, 2022 balance sheet = Unearned service revenue + Notes payable

= ($49,000*2/8) + $40,000 = $52,250