You've been provided with the following Trial Balance

Calculate TOTAL LIABILITIES

Cash          27,300
Accounts Receivable          15,000
Inventory          24,500
Prepaid Expenses            2,375
Motor vehicle          64,100
Equipment        125,000
Accounts Payable          35,000
Unearned Revenue            8,000
Wages Payable            8,000
Bank Loan          50,000
Share Capital          87,000
Retained Earnings          24,275
Dividends          (2,000)
Revenue          78,000
Cost of Sales        (17,000)
Wages Expense          (8,000)
Interest expense             (250)
Marketing expense          (2,800)
Insurance expense          (1,950)

Question

You've been provided with the following Trial Balance

Calculate TOTAL LIABILITIES

Cash	         27,300
Accounts Receivable	         15,000
Inventory	         24,500
Prepaid Expenses	           2,375
Motor vehicle	         64,100
Equipment	       125,000
Accounts Payable	         35,000
Unearned Revenue	           8,000
Wages Payable	           8,000
Bank Loan	         50,000
Share Capital	         87,000
Retained Earnings	         24,275
Dividends	         (2,000)
Revenue	         78,000
Cost of Sales	       (17,000)
Wages Expense	         (8,000)
Interest expense	            (250)
Marketing expense	         (2,800)
Insurance expense	         (1,950)

BlackTom AI · Accepted Answer

Total liabilities are the sum of all obligations on the trial balance: Accounts Payable, Unearned Revenue, Wages Payable and the Bank Loan.

1) Relevant knowledge points and concepts
- Liabilities represent present obligations the business must settle in the future. They are distinct from assets (resources) and equity (owner claims).  
- Current liabilities typically include accounts payable, wages payable and unearned revenue. Long-term liabilities include bank loans (if not due within one year). For “Total Liabilities” include both current and non‑current liabilities.

2) Step‑by‑step identification
From the trial balance, identify each liability line:
- Accounts Payable = 35,000
- Unearned Revenue = 8,000
- Wages Payable = 8,000
- Bank Loan = 50,000

Do not include asset accounts (Cash, Accounts Receivable, Inventory, Prepaid Expenses, Motor vehicle, Equipment), equity accounts (Share Capital, Retained Earnings, Dividends), or expense/revenue accounts (Revenue, Cost of Sales, Wages Expense, Interest expense, Marketing expense, Insurance expense). For example, Wages Expense is an expense (flow), whereas Wages Payable is a liability (stock).

3) Calculation with intermediate steps
Sum the liability amounts:
- Step 1: 35,000 (Accounts Payable) + 8,000 (Unearned Revenue) = 43,000
- Step 2: 43,000 + 8,000 (Wages Payable) = 51,000
- Step 3: 51,000 + 50,000 (Bank Loan) = 101,000

4) Why this is correct
Each included line is a recognized liability on the trial balance. No other listed account represents a liability balance to be included in total liabilities. The arithmetic sums those liabilities accurately.

5) Common incorrect inclusions (why other choices would be wrong)
- Including Dividends (2,000) would be wrong because dividends are a distribution reducing equity, not a liability here (no Dividends Payable shown).  
- Including expense balances (Wages Expense, Interest Expense) is incorrect because expenses are not liability accounts.  
- Omitting the Bank Loan or any payable would understate total liabilities.

6) Conclusion
Total Liabilities = 101,000, which matches the provided correct answer (101000).

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