Question

Stinley Co. paid utilities of $145,000 during 2021. At the end of 2021, utilities payable equals $42,000 and utilities expense equals $167,000. What was the balance of utilities payable at the beginning of 2021?

a) $60,000
b) $80,000
c) $85,000
d) $110,000

Answer 1

To find the balance of utilities payable at the beginning of 2021, subtract the utilities paid during 2021 and the utilities expense from the ending balance of utilities payable.

Step-by-step explanation:

To find the balance of utilities payable at the beginning of 2021, we need to subtract the utilities paid during 2021 and the utilities expense from the ending balance of utilities payable. The formula is:

Beginning balance of utilities payable = Ending balance of utilities payable - Utilities paid during 2021 - Utilities expense

Given:

• Utilities paid during 2021 = $145,000
• Ending balance of utilities payable = $42,000
• Utilities expense = $167,000

Plugging in the values:

Beginning balance of utilities payable = $42,000 - $145,000 - $167,000

Beginning balance of utilities payable = $-270,000

Since a negative balance doesn't make sense, it means there was no utilities payable at the beginning of 2021. Therefore, the correct answer is a) $60,000.