Sunny Day Real Estate Balance Sheet December 31, 2012 $25,000 30,000 50,000 70,0

Question

Sunny Day Real Estate Balance Sheet December 31, 2012 $25,000 30,000 50,000 70,000 85,000 120,000 60,000 15,000 Cash Prepaid Insurance Accounts Receivable Inventory Land Held for Investment Land Building Accounts Payable Salaries and Wages Payable Mortgage Payable Total Liabilities $160,000 $100,000 Owner's Capital 370,000 Less Accumulated Depreciation (20,000) 80,000 70,000 $530,000 Total Liabilities and Trademark Total Assets Owner's Equity $530,000 The total dollar amount of liabilities to be classified as current liabilities is a. $15,000 b. $60,000 c. $75,000 d. $160,000

Explanation / Answer

Current liabilities operating liabilities are a significant part of the accounts of the company. These reflect the debt obligations which the company has to pay off within one year. These are present on the liabilities side and include all the short term debt or the accounts payable, including the accrued liabilities and other debts. In this case it adds account payable and salaries. Hence these are added to make $60,000 + $15000 = $75000

Option C is correct

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