Rice Co. was incorporated on January 1, 20X1, with $500,000 from the issuance of stock and borrowed funds of $75,000. During the first year of operations, net income was $25,000. On December 15, Rice paid a $2,000 cash dividend. No additional activities affected owners' equity in 20X1. At December 31, 20X1, Rice's liabilities had increased to $94,000. In Rice's December 31, 20X1, balance sheet, total assets should be reported at?

With an initial equity of $500,000, income of $25,000 and dividends of $2,000, Rice would have total stockholders' equity of $523,000 at 12/31/X1. With liabilities of $94,000, assets will equal the total of liabilities and stockholders' equity or $617,000.

Expanded explanation: The borrowed funds of $75,000 are liabilities. As such, they already are included in the liabilities total of $94,000.

** I understand how the problem was solved but I dont

understand why they don't include the 75,000 borrowed funds**