Answer:
B) a decrease of $40,000
Explanation:
As we Know Working capital is the the net or current assets and current liabilities.
Increase in Current Assets
Cash $20,000
Accounts receivable $40,000
Inventories <u>$60,000</u>
Total Increase in CA $120,000
Increase in Current Liabilities
Accounts payable $50,000
Accruals $10,000
Long-term debt <u>$100,000</u>
Total Increase in CA $160,000
Increase in Working Capital = Increase in Current Assets - Increase in Current Liabilities
Change in Working Capital = $120,000 - $160,000 = -$40,000
As current Liabilities increased more than the current assets, so the working capital will decrease by $40,000
