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11 January, 04:50

At the beginning of April, Warren Corporation's assets totaled $257,000 and liabilities totaled $77,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $28,500 cash. A building costing $112,000 was purchased using $18,500 cash and by signing an $93,500 long-term note payable. Short-term investments costing $10,700 were purchased using cash. $11,700 was paid to an employee as a loan; the employee signed a six-month note in exchange for the loan. How much are Warren's total liabilities at the end of April

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  1. 11 January, 05:00
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    Total liabilities is $170,500

    Explanation:

    Warren's total liabilities at end of April comprises of the beginning balance of liabilities of $77,000 plus the notes payable signed in respect of the building acquired in the course of the year, the computation is shown below:

    Beginning balance of liabilities $77,000

    Notes payable $93,500

    Total liabilities $170,500

    The notes signed by employee of $11,700 is notes receivable as the employee is owing the company and should be classified as notes payable, but notes receivable instead, an asset.
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