Answer:
The amount of total liabilities is $5,000
Explanation:
In this question, we apply the accounting equation which is shown below:
Total assets = Total liabilities + owner's equity
where,
Total assets = Cash + supplies + prepaid rent + equipment
= $12,000 + $4,500 + $2,000 + $65,000
= $83,500
Owner's equity = common stock + ending retained earning balance
where,
Ending retained earning balance = Beginning retained earning balance + net income - dividend paid
The net income = Service revenue - Miscellaneous expenses - salaries expense
= $30,000 - $20,000 - $4,500
= $5,500
Now put these values to the above formula
So, the ending retained earning balance would equal to
= $8,000 + $5,500 - $3,000
= $10,500
And, the owner equity = $68,000 + $10,500 = $78,500
So, the total liabilities would be
= $83,500 - $78,500
= $5,000
