Question

Use the following data to determine the total amount of working capital. Pretty Pet Supplies Balance...

Use the following data to determine the total amount of working capital.

Pretty Pet Supplies

Balance Sheet

December 31, 2022

Cash                                       $    126,000            Accounts payable                       $ 165,000

Accounts receivable                    120,000            Salaries and wages payable            30,000

Inventory                                      210,000            Note payable (due 2025)                270,000

Short-term investments                 90,000            Total liabilities                                 465,000

Land (held for future use)            255,000           

Land                                             285,000                                                                                

Buildings                 $339,000                                Common stock                                360,000

Less: Accumulated                                               Retained earnings                          750,000

      depreciation         (60,000)     279,000            Total stockholders’ equity            1,110,000

Franchise                                     210,000            Total liabilities and

Total assets                            $1,575,000                 stockholders’ equity              $1,575,000

a.   $606,000

b.   $351,000

c.   $381,000

d.         $261,000

Business   Accounting   
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Answer #1

Answer:

Determine the total amount of working capital:

Particulars Amount
Current Assets:
Cash $126,000
Accounts receivable $120,000
Inventory $210,000
Short term investments $90,000
Total Current Assets (a) $546,000
Current Liabilities:
Accounts Payable $165,000
Salaries & wages payable $30,000
Total Current Liabilities (b) $195,000
Working Capital (a-b) $351,000

Accordingly, Option (b) i.e. $351,000 is the correct answer.

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