Question

Presented below are selected accounts for San Marcos Corporation for December 31 of the current year. Debit Credit Accounts Receivablelong dashtrade $ 730 Building and Equipment 1 comma 030 Cash in Banklong dashoperating 59 Interest Receivable 45 Installment Receivables 70 Merchandise Inventory 35 Land 310 Notes Receivablelong dashlong term 535 Petty Cash 18 Prepaid Expenseslong dashcurrent 42 Supplies 29 Patent 70 Accounts Payablelong dashtrade 635 Accumulated Depreciation 235 Additional Paidminusin Capital 610 Allowance for Uncollectible Accounts 65 Cash Dividends Payable 70 Common Stocklong dash​$1 par value 55 Income Tax Payable 95 Notes Payablelong dash2 years 910 Retained Earnings 75 Unearned Revenueslong dash2 years 95 Cash Dividends Declared 250 Service Revenue 378 Operating Expenses 200 TOTALS ​$3 comma 223 ​$3 comma 223 What are total liabilities for San Marcos​ Corporation?

Answer 1

Answer:

The total liabilities for San Marcos​ Corporation are $1,805.

Explanation:

Total liabilities are the sum of current and long-term liabilities. Current liabilities are those that typically last for a year or less. For San Marcos Corporation, the current liabilities are accounts payable, cash dividends payable, and income tax payable.

Long-term liabilities are typically due more than one year in the future. For San Marcos Corporation, the long-term liabilities are notes payable and unearned revenues.  

Calculation of total liabilities for San Marcos Corporation:

Accounts payable - trade                $635

Cash dividends payable                  $70

Income tax payable                          $95

Notes payable - 2 years                   $910

Unearned revenues - 2 years          $95

Total liabilities                                   $1,805

Note that the allowance for uncollectible debts, while of a similar nature, is typically treated as a contra-asset. That is, its total amount is deducted from accounts receivable - trade to arrive at a net accounts receivables figure.