On December 31, 2016, Krug Company prepared adjusting entries that included the following items: Depreciation expense: $31,000.
Accrued sales revenue: $29,000.
Accrued expenses: $12,000.
Used insurance: $9,000; the insurance was initially recorded as prepaid.
Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue.
If Krug Company reported total liabilities of $110,000 prior to adjusting entries, how much are Krug's total liabilities after the adjusting entries?

Question

Quizplus · Accepted Answer

The accrued expenses of $12,000 increase liabilities, making the total liabilities $110,000 + $12,000 = $122,000. However, the accrued sales revenue and rent revenue earned do not affect liabilities, and the used insurance and depreciation expense do not affect liabilities either. Therefore, the correct total liabilities after adjustments is $115,000.

On December 31, 2016, Krug Company Prepared Adjusting Entries That