Lucy Morton opened an engineering office and titled the business Engineering Enterprises P.C. During its first month of operations, it completed the following transactions: I. Lucy invested $30,000 in the business, which in turn issued common stock to her.
II. The business purchased equipment on account for $6,000.
II. The business provided engineering services on account, $10,000.
III. The business paid salaries to the receptionist, $1,000.
IV. The business received cash from a customer as payment on account $6,000.
V. The business borrowed $8,000 from the bank, issuing a note payable.
Total liabilities would be:
A) $0.
B) $6,000.
C) $14,000.
D) $20,000.

Question

Quizplus · Accepted Answer

The total liabilities for Engineering Enterprises P.C. would be the sum of the accounts payable and notes payable, which is $6,000 + $8,000 = $14,000. The other transactions involve investments, revenues, and expenses, which do not affect the liabilities of the business.

Lucy Morton Opened an Engineering Office and Titled the Business