Question

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. What was the total amount of Gotebo's liabilities following these six transactions?

Answer 1

Total liabilities = $12,300

Working

Transaction	Assets=	Liabilities+	Equity
1	$     15,000.00		$   15,000.00
2	$     12,000.00	$      12,000.00
3	$                    -
4	$     14,000.00		$   14,000.00
5	$           300.00	$            300.00
6	$   (10,000.00)		$ (10,000.00)
Total	$     31,300.00	$      12,300.00	$   19,000.00

Transaction 3 will not affect equation because increase in one asset decreases another asset.