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17 February, 15:28

Valley Technology Balance Sheet As of March 11, 2020 (amounts in thousands) Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100 Use T-accounts to record the transactions below, which occur on March 12, 2020, close the T-accounts, and construct a balance sheet to answer the question. 1. Buy $15,000 worth of manufacturing supplies on credit 2. Issue $85,000 in stock 3. Borrow $63,000 from a bank 4. Pay $5,000 owed to a supplier 5. Receive payment of $12,000 owed by a customer What is the final amount in Total Liabilities?

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  1. 17 February, 15:43
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    total liabilities = accounts payable $11,500 + unearned revenue $7,500 + debt $65,900 + other liabilities $800 = $85,700

    Explanation:

    Cash 9,700 Accounts Payable 1,500 Accounts Receivable 4,500 Debt 2,900 Inventory 3,800 Other Liabilities 800 Property Plant & Equipment 16,400 Total Liabilities 5,200 Other Assets 1,700 Paid-In Capital 7,300 Retained Earnings 23,600 Total Equity 30,900 Total Assets 36,100 Total Liabilities & Equity 36,100

    1. Buy $15,000 worth of manufacturing supplies on credit

    Supplies Accounts payable

    debit credit debit credit

    15,000 1,500

    15,000

    16,500

    2. Issue $85,000 in stock

    Cash Paid-In Capital

    debit credit debit credit

    9,700 7,300

    85,000 85,000

    94,700 92,300

    3. Borrow $63,000 from a bank

    Cash Debt

    debit credit debit credit

    94,700 2,900

    63,000 63,000

    157,700 65,900

    4. Pay $5,000 owed to a supplier

    Cash Accounts payable

    debit credit debit credit

    157,700 16,500

    5,000 5,000

    152,700 11,500

    5. Receive payment of $12,000 owed by a customer

    Cash Accounts receivable

    debit credit debit credit

    152,700 4,500

    12,000 12,000

    164,700 7,500

    Due to some strange reason, accounts receivable has a debit balance ( = $4,500 - $12,000). Since that is not possible, the remaining part $7,500 must be included under unearned revenue:

    Accounts receivable Unearned revenue

    debit credit debit credit

    7,500 0

    7,500 7,500

    0 0 7,500
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