Question

Watson​ Foods, Inc. reported the following transactions for September 2019.

​a)	The business received $21,000 cash and issued common stock. It was credited to Common Stock.
​b)	The business purchased office equipment for $11,000 for which $4,000 cash was paid and the balance was put on a note payable.
​c)	Paid insurance expense of $1,700 cash.
​d)	Paid the September utility bill for $900 cash.
​e)	Paid $1,500 cash for September rent.
​f)	The business had sales of $9,000 in September. Of these​ sales, 40​% were cash​ sales, and the balance was credit sales.
​g)	The business paid $8,000 cash for office furniture.

What are the total liabilities at the end of​ September, 2019?

A.$7,000

B.$11,000

C.$9,000

D.$1,700

Answer 1

a) Asset - Debited, Stock holders equity - Credited.

b) Asset(office equipment) - Debited, Asset(cash) - Credited, Liability(notes payable) - Credited.

c) Expense - Debited, Asset - Credited.

d) Expense - Debited, Asset - Credited.

e) Expense - Debited, Asset - Credited.

f) Asset(cash) - Debited, Asset(accounts receivable) - Debited, Revenues - Credited.

g) Asset(office furniture) - Debited, Asset(cash) - Credited.

The only liability is Notes payable for $7,000 ($11,000 - $4,000)

The answer is A.