Question

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

Answer 1

Answer:

There are 2 transactions that will increase Gotebo's liabilities:

1. Purchased land for $12,000, signing a note payable for the full amount.

AND

2. Purchased $300 of office supplies on account.

Explanation:

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.

How many of these transactions increased Gotebo's liabilities?

2 of the transactions increased Gotebo's liabilities

Liabilities are an obligation to make payment in the future against present transactions.

The transactions in the scenario that leads to making payment in the future are:

2. Purchased land for $12,000, signing a note payable for the full amount.

AND

5. Purchased $300 of office supplies on account.