Question

A corporation had a change in net working capital of $40,000 this year. At the end of the year the balance sheet showed $150,000 in current assets and $100,000 in current liabilities. At the beginning of the year the balance sheet showed $120,000 in current assets. What was the beginning of the year amount of current liabilities?

Answer 1

`\large\boxed{\large\boxed{\$ 110,000}}`

Step-by-step explanation:

Net working capital is the difference between the current assets and the current liabilities:

`Net\text{ }working\text{ }capital=Current\text{ }assets-Current\text{ }liabilities`

Change in the net working capital (ΔNWC = $40,000)

`\Delta NWC=\Delta\text{Current assets}-\Delta\text{Current liabilities}`

`\Delta\text{Current assets}=\$ 150,000-\$ 120,000=\$ 30,000`

`\Delta\text{Current liabilities}=\$ 100,000-x`

`\$ 40,000=\$ 30,000-(\$ 100,000-x)`

`x=\$ 40,000-\$ 30,000+\$ 100,000=\$ 110,000`