Question

Use the following data to answer QuestionAccounts payable $30,000Accounts receivable 65,000Accrued liabilities 7,000Cash 20,000Intangible assets 40,000Inventory 72,000Long-term investments 100,000Long-term liabilities 75,000Marketable securities 36,000Notes payable (short-term) 20,000Property, plant, and equipment 625,000Prepaid expenses 2,000
1. Based on the above data, what is the amount of quick assets?a. $163,000b. $195,000c. $121,000d. $56,0002. Based on the above data, what is the amount of working capital?a. $238,000b. $138,000c. $178,000d. $64,000

Answer 1

Answer:

Current (quick) assets: $195,000

Working capital: $138,000

Explanation:

We can find the correct answer by laying out the information appropriately:

Current Assets:

Accounts Receivable: $65,000

Cash: $20,000

Inventory: $72,000

Marketable securities: $36,000

Prepaid expenses: $2,000

Total: $195,000

Current Liabilities:

Accounts payable: $30,000

Accrued liabilities: $7,000

Notes payable (short-term): $20,000

Total: $57,000

Working capital = current assets - current liabilities

Working capital = $195,000 - $57,000

                           = $138,000

The following accounts mentioned in the question are non-current assets: intangible assets, long-term investments, and property, plant and equipment.

And long-term liabilities, as the name implies, is classified as a non-current liability.