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

Answer:

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

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)

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

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

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

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

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