Question

XYZ Company began operations in May, 2022 by selling common stock to
owners in exchange for $90,000 cash. During 2022, ABC Company entered
into the following transactions:

1.  On May 23, ABC Company purchased inventory for $50,000 cash.

2.  On June 1, ABC Company purchased a three-year insurance policy
    for $32,400 cash.

3.  On July 1, ABC Company received $49,000 cash from a customer
    for services to be performed over the next 8 months.

4.  On August 1, ABC Company purchased equipment costing $60,000 by
    paying $20,000 in cash and agreeing to pay the remainder within
    six months. The equipment was given a 10-year life and a $4,200
    residual value.

5.  On August 18, ABC Company sold one-half of the inventory that
    was purchased on May 23 to a customer for $44,000 cash.

Calculate the amount of total liabilities that ABC Company would
report in its December 31, 2022 balance sheet after all the above
transactions are recorded and all necessary adjusting entries are
made and posted. 

Answer 1

Total liabilities report in its December 31, 2022
	Accounts Payable	$40,000
	Unearned Service Revenue	$12,250
		$52,250
Date	Account Titles and Explanation	Debit	Credit
May 1	Cash	$90,000
	Common Stock		$90,000
May 23	Inventory	$50,000
	Cash		$50,000
June 1	Prepaid Insurance	$32,400
	Cash		$32,400
July 1	Cash	$49,000
	Unearned Service Revenue		$49,000
Aug 1	Equipment	$60,000
	Cash		$20,000
	Accounts Payable		$40,000
Aug 18	Cash	$44,000
	Sales Revenue		$44,000
	Cost of goods sold	$25,000
	Inventory		$25,000
Adjustment
Dec 31	Insurance Expense	$6,222
	Prepaid Insurance		$6,222
	($32,400/3 x 7/12)
Dec 31	Unearned Service Revenue	$36,750
	Service Revenue		$36,750
	($49,000 x 6/8)