Category

Prior year

Current year

Accounts payable

41,400

45,000

Accounts receivable

115,200

122,400

Accruals

16,200

13,500

Additional paid in capital

200,000

216,660

Cash

???

???

Common Stock @ par value

37,600

42,000

COGS

131,400

170,775.00

Depreciation expense

21,600

22,462.00

Interest expense

16,200

16,812.00

Inventories

111,600

115,200

Long-term debt

135,000

137,868.00

Net fixed assets

379,193.00

399,600

Notes payable

59,400

64,800

Operating expenses (excl. depr.)

50,400

60,522.00

Retained earnings

122,400

136,800

Sales

255,600

335,656.00

Taxes

9,900

18,597.00

What is the current year's cash balance?

To determine the current year's cash balance, we need to use the accounting equation from the balance sheet:

\[
\text{Assets} = \text{Liabilities} + \text{Equity}
\]

### Step 1: Define the Categories

- **Assets**: Cash, Accounts Receivable, Inventories, Net Fixed Assets
- **Liabilities**: Accounts Payable, Accruals, Notes Payable, Long-term Debt
- **Equity**: Common Stock at Par Value, Additional Paid-in Capital, Retained Earnings

### Step 2: List the Known Values for the Current Year

**Assets:**
- Cash = ??? (What we're solving for)
- Accounts Receivable = 122,400
- Inventories = 115,200
- Net Fixed Assets = 399,600

\[
\text{Total Assets} = \text{Cash} + 122,400 + 115,200 + 399,600
\]

**Liabilities:**
- Accounts Payable = 45,000
- Accruals = 13,500
- Notes Payable = 64,800
- Long-term Debt = 137,868

\[
\text{Total Liabilities} = 45,000 + 13,500 + 64,800 + 137,868
\]

**Equity:**
- Common Stock at Par Value = 42,000
- Additional Paid-in Capital = 216,660
- Retained Earnings = 136,800

\[
\text{Total Equity} = 42,000 + 216,660 + 136,800
\]

### Step 3: Calculate Total Liabilities and Equity

\[
\text{Total Liabilities} = 45,000 + 13,500 + 64,800 + 137,868 = 261,168
\]

\[
\text{Total Equity} = 42,000 + 216,660 + 136,800 = 395,460
\]

\[
\text{Liabilities + Equity} = 261,168 + 395,460 = 656,628
\]

### Step 4: Calculate Total Assets

Since Total Assets must equal Liabilities + Equity, we set up the equation:

\[
\text{Cash} + 122,400 + 115,200 + 399,600 = 656,628
\]

### Step 5: Solve for Cash

\[
\text{Cash} = 656,628 - (122,400 + 115,200 + 399,600)
\]

\[
\text{Cash} = 656,628 - 637,200
\]

\[
\text{Cash} = 19,428
\]

### Final Answer:

The cash balance for the current year is **$19,428**.

Would you like more details or explanations on any of the steps?

---

Here are 5 related questions for further practice:

1. How would the cash balance change if accounts receivable increased by $10,000?
2. What would be the impact on equity if additional paid-in capital increased by 10%?
3. How is the net working capital calculated in this scenario?
4. If the company pays off $5,000 of its accounts payable, how does this affect cash?
5. What is the effect on the balance sheet if depreciation expense increases?

**Tip:** Remember that in the accounting equation, every change in liabilities or equity will directly affect the assets, including cash!

Find out how to calculate the current year's cash balance using the balance sheet accounting equation. This detailed solution includes step-by-step calculations for assets, liabilities, and equity, leading to a cash balance of $19,428. Ideal for students studying college-level accounting and finance.

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