Montauk Oil Co.reports these account balances at December 31,2017 On January 2,2018,Montauk Oil collected $50,000 of its accounts receivable and paid $20,000 of its accounts payable.On January 3,2018,total liabilities are:

Question

Montauk Oil Co.reports these account balances at December 31,2017  On January 2,2018,Montauk Oil collected $50,000 of its accounts receivable and paid $20,000 of its accounts payable.On January 3,2018,total liabilities are:

Quizplus · Accepted Answer

To find the total liabilities on January 3, we need to deduct the amount of accounts receivable collected and accounts payable paid from the total liabilities reported at December 31, 2017. 
Total liabilities as of December 31, 2017 = $400,000
Accounts receivable collected on January 2, 2018 = $50,000
Accounts payable paid on January 2, 2018 = $20,000
Total liabilities on January 3, 2018 = Total liabilities as of December 31, 2017 - Accounts receivable collected + Accounts payable paid
= $400,000 - $50,000 + $20,000
= $370,000
Therefore, the correct choice is B.