Question

The following balance sheet information is provided for Apex Company for Year 2:Assets:-Cash $5,400-Accounts Receivable $15,500-Inventory $18,000-Prepaid Expenses $1,600-Plant and equipment, net of depreciation $20,200-Land $19,950Total Assets $80,650Liabilities and Stockholders' Equity-Accounts Payable $4,500-Salaries Payable $11,500-Bonds Payable (due in ten years) $19,000-Common stock, no par $30,000-Retained Earnings $15,650Total liabilities and stockholders' equity $80,650What is the company's working capital?

Answer 1

Answer:

The company's working capital is $24,500

Explanation:

Working capital: The working capital is the capital which show a difference between current assets and the current liabilities

In mathematically,

Working capital = Current assets - current liabilities

So,

The current assets equals to

= Cash + accounts receivable + inventory + prepaid expenses

= $5,400 + $15,500 + $18,000 + $1,600

= $40,500

And, The current liabilities equals to

= Accounts payable + salaries payable

= $4,500 + $11,500

= $16,000

So, the working capital is

= $40,500 - $16,000

= $24,500