McCoy Corporation provides plumbing services. Transactions during the first year of operations are provided below.
a. Received $12,000 cash and issued common stock to Sharon McCoy.
B. Paid $1,900 cash for equipment to be used for plumbing repairs.
C. Borrowed $10,000 from a local bank and deposited the money in the checking account.
D. Paid $400 rent for the year.
E. Purchased $500 of office supplies by cash.
F. Completed a plumbing repair project for a local lawyer and received $3,200 cash.
Calculate the amount of total liabilities at the end of the first year.

Question

McCoy Corporation provides plumbing services. Transactions during the first year of operations are provided below. 
a. Received $12,000 cash and issued common stock to Sharon McCoy.
B. Paid $1,900 cash for equipment to be used for plumbing repairs.
C. Borrowed $10,000 from a local bank and deposited the money in the checking account.
D. Paid $400 rent for the year.
E. Purchased $500 of office supplies by cash.
F. Completed a plumbing repair project for a local lawyer and received $3,200 cash.
Calculate the amount of total liabilities at the end of the first year.

Quizplus · Accepted Answer

Liabilities increase when a company borrows money. From the given transactions, the only one that increases liabilities is borrowing $10,000 from a local bank (transaction C). Transactions A, B, D, E, and F do not affect liabilities.

McCoy Corporation Provides Plumbing Services