Question

Use the following data to determine the total amount of working capital.Koonce Office SuppliesBalance SheetDecember 31, 2012Cash $ 130,000 Accounts Payable $ 140,000Prepaid Insurance 60,000 Salaries Payable 20,000Accounts Receivable 100,000 Mortgage Payable 160,000Inventory 140,000 Total Liabilities $320,000Land held for Investment 150,000Land 180,000Buildings $200,000 Common Stock $240,000Less Accumulated Retained Earnings 500,000Depreciation (40,000) 160,000 Total Stockholders’ Equity $740,000Trademarks 140,000 Total Liabilities andTotal Assets $1,060,000 Stockholders’ Equity $1,060,000a. $270,000.b. $590,000.c. $150,000.d. $120,000.

Answer 1

Answer:

a. $270,000

Explanation:

The computation of the total amount of working capital is shown below:

As we know that

working capital = Current asset - current liabilities

where,

Current asset = Cash + prepaid insurance + account receivable + inventory

= $130,000 + $60,000 + $100,000 + $140,000

= $430,000

And, the current liabilities is

= Account payable + salaries payable

= $140,000 + $20,000

= $160,000

So the working capital is

= $430,000 - $160,000

= $270,000