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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?

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Edufirst

Answer:

[tex]\large\boxed{\large\boxed{\$ 110,000}}[/tex]

Explanation:

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

          [tex]Net\text{ }working\text{ }capital=Current\text{ }assets-Current\text{ }liabilities[/tex]

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

        [tex]\Delta NWC=\Delta\text{Current assets}-\Delta\text{Current liabilities}[/tex]

        [tex]\Delta\text{Current assets}=\$ 150,000-\$ 120,000=\$ 30,000[/tex]        

         [tex]\Delta\text{Current liabilities}=\$ 100,000-x[/tex]

          [tex]\$ 40,000=\$ 30,000-(\$ 100,000-x)[/tex]

          [tex]x=\$ 40,000-\$ 30,000+\$ 100,000=\$ 110,000[/tex]

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