Question

Prezas Company's balance sheet showed total current assets of $2,500, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital?

Answer 1

Answer:

$1,275

Explanation:

Recall that,

Net operating working assets (NOWC) = Current assets - (current liabilities - notes payable).

Thus,

Given that

Current assets = 2500

Current liabilities = 975 + 250 + 600 = 1825

Notes Payable = 600

Therefore,

NOWC = 2500 - (1825 - 600)

NOWC = 2500 - 1225

NOWC = $1275