A company was formed with $60,000 cash contributed by its owners in exchange for common stock.The company borrowed $30,000 from a bank.The company purchased $10,000 of inventory and paid cash for it.The company also purchased $70,000 of equipment by paying $10,000 in cash and issuing a note for the remainder.
-Use the information above to answer the following question.What is the amount of the total liabilities to be reported on the balance sheet?
A) $60,000.
B) $0
C) $90,000.
D) $80,000.

Question

Quizplus · Accepted Answer

The total liabilities of the company include the $30,000 borrowed from the bank and the remaining balance of the note payable for the equipment, which is $60,000 ($70,000 - $10,000). Therefore, the total liabilities are $30,000 + $60,000 = $90,000. The contributed capital by the owners and the purchase of inventory do not affect the liabilities.

A Company Was Formed with $60,000 Cash Contributed by Its