At December 31,2017,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 31,2017 cash balance?

Question

At December 31,2017,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 31,2017 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. First, calculate total assets, liabilities, and equity, then solve for Cash.Total Assets = Cash + Accounts Receivable + Land + Equipment + Building = Cash + $40,000 + $240,000 + $120,000 + $180,000 = Cash + $580,000.Total Liabilities = Accounts Payable + Notes Payable = $16,000 + $190,000 = $206,000.Total Equity = Capital Stock + Retained Earnings = $260,000 + $160,000 = $420,000.Assets = Liabilities + Equity, so Cash + $580,000 = $206,000 + $420,000.Solving for Cash gives Cash = $626,000 - $580,000 = $46,000.

At December 31,2017,the Accounting Records of Tasty Foods Corporation Contain