Indirect Oil Co.reports these account balances at December 31,2017 On January 2,2018,Indirect Oil collected $25,000 of its accounts receivable and paid $20,000 of its accounts payable.On January 3,2018,total liabilities are:

Question

Indirect Oil Co.reports these account balances at December 31,2017  On January 2,2018,Indirect Oil collected $25,000 of its accounts receivable and paid $20,000 of its accounts payable.On January 3,2018,total liabilities are:

Quizplus · Accepted Answer

- The accounts receivable decreased by $25,000, so the new balance is $275,000.
- The accounts payable decreased by $20,000, so the new balance is $120,000.
- Total liabilities = accounts payable + accrued expenses = $120,000 + $45,000 = $165,000.