During January 2015, the first month of operations, a consulting firm had following transactions:
1.Issued common stock to owners in exchange for $20,000 cash.
2.Purchased $5,000 of equipment, paying $1,000 cash and signing a promissory note for $4,000.
3.Received $9,000 in cash for consulting services performed in January.
4.Purchased $1,500 of supplies on account; all of the supplies were used in January.
5.Provided consulting services on account in the amount of $16,000.
6.Paid $750 on account.
7.Paid $3,000 to employees for work performed during January.
8.Received a bill for utilities for January of $3,400; the bill remains unpaid.
-Use the information above to answer the following question.What is the amount to be reported as total liabilities on the balance sheet at the end of January?
A) $4,750.
B) $4,150.
C) $8,150.
D) $8,500.

Question

Quizplus · Accepted Answer

The total liabilities at the end of January are the sum of the amounts owed on account for supplies ($1,500), the amount owed to employees for work performed in January ($3,000), and the bill for utilities ($3,400), which remains unpaid.

Total liabilities = $1,500 + $3,000 + $3,400 = $8,900

Therefore, the best choice is C ($8,150) as it is closest to the calculated amount.

During January 2015, the First Month of Operations, a Consulting