At December 31, 2016, the accounting records of Tasty Foods Corporation contain the following: $$\begin{array} { l r l r }
\text { Accounts payable } & \$ 16,000 & \text { Accounts receivable } & \$ 40,000 \
\text { Land } & \$ 240,000 & \text { Cash } & ? \
\text { Capital stock } & ? & \text { Equipment } & \$ 120,000 \
\text { Building } & \$ 180,000 & \text { Notes payable } & \$ 190,000 \
\text { Retained earnings } & \$ 160,000 & &
\end{array}$$ ? If capital stock is $260,000, what is the December 31, 2016 cash balance?

Question

At December 31, 2016, the accounting records of Tasty Foods Corporation contain the following: $$\begin{array} { l r l r } 
\text { Accounts payable } & \$ 16,000 & \text { Accounts receivable } & \$ 40,000 \
\text { Land } & \$ 240,000 & \text { Cash } & ? \
\text { Capital stock } & ? & \text { Equipment } & \$ 120,000 \
\text { Building } & \$ 180,000 & \text { Notes payable } & \$ 190,000 \
\text { Retained earnings } & \$ 160,000 & &
\end{array}$$ ? If capital stock is $260,000, what is the December 31, 2016 cash balance?

Quizplus · Accepted Answer

To find the cash balance, we use the accounting equation: Assets = Liabilities + Equity. Here, Assets include Cash, Accounts Receivable, Land, Equipment, and Building. Liabilities include Accounts Payable and Notes Payable. Equity includes Capital Stock and Retained Earnings. Plugging in the given values: Cash + $40,000 (Accounts Receivable) + $240,000 (Land) + $120,000 (Equipment) + $180,000 (Building) = $16,000 (Accounts Payable) + $190,000 (Notes Payable) + $260,000 (Capital Stock) + $160,000 (Retained Earnings). Solving for Cash gives us $46,000.

At December 31, 2016, the Accounting Records of Tasty Foods