Smoltz company had $375,000 of current assets and $135,000 of current liabilities before borrowing $90,000 from the bank with a

Question

natka813 [3]

3 years ago

11

Smoltz company had $375,000 of current assets and $135,000 of current liabilities before borrowing $90,000 from the bank with a

3 month note payable. what effect did the borrowing transaction have on the amount of smoltz company's working capital?

Business

1 answer:

QveST [7] · Answer 1 · 2022-01-31T17:29:38+03:00

The borrowing transaction WILL INCREASE THE WORKING CAPITAL OF SMOLTZ COMPANY BY $90,000.00.
Working capital is defined as the amount of a company's asset that can be converted into cash in the near future, taking into account the payment which has to be made. Borrowing money increases the amount of working capital that a company has.