Sharon Samson starts a plumbing service called Reliable Waterworks. Transactions of Reliable Waterworks during the first year of operations are given below:

a) Sharon deposited $10,000 into a new cheque account for the business and recorded the capital contribution.
b) Paid $1200 cash for equipment to be used for plumbing repairs.
c) Borrowed $14,000 from a local bank and deposited the money in the cheque account.
d) Paid $400 rent for the year.
e) Purchased $300 of office supplies by cash.
f) Completed a plumbing repair project for a local lawyer and received $3500 cash.

Calculate the amount of total liabilities at the end of the first year.

Question

Sharon Samson starts a plumbing service called Reliable Waterworks. Transactions of Reliable Waterworks during the first year of operations are given below:

a)	Sharon deposited $10,000 into a new cheque account for the business and recorded the capital contribution.
b)	Paid $1200 cash for equipment to be used for plumbing repairs.
c)	Borrowed $14,000 from a local bank and deposited the money in the cheque account.
d)	Paid $400 rent for the year.
e)	Purchased $300 of office supplies by cash.
f)	Completed a plumbing repair project for a local lawyer and received $3500 cash.

Calculate the amount of total liabilities at the end of the first year.

Quizplus · Accepted Answer

The only liability incurred during the first year was the $14,000 loan from the bank. Therefore, the total liabilities at the end of the first year would be $14,000. Choice A is the correct answer.

Sharon Samson Starts a Plumbing Service Called Reliable Waterworks