Purchase Solution

# Calculating Working Capital

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The balance sheet of Hart Co. contained the following items, among other:
Cash.....\$150,000
Accounts Receivable...65,000
Inventory...100,000
Store Eq(net)...200,000
Other Assets...50,000
Mortgage Payable(due in 3years)...140,000
Note Payable(due in 10 days)...135,000
Accounts payable...75,000
Capital Stock...50,000
Retained Earnings...165,000

A)From the above information compute:
1)Current Assets:\$__________
2)Current Liabilities\$_________
3)The current ratio\$___________to 1
4)Working Capital\$_____________

B)Assume that Hart Co. pays the note payable of \$135,000, thus reducing cash to \$15,000. Compute the following after the completion of this transaction:
1)The current ration\$______________to 1
2)Working Capital\$______________

##### Solution Summary

Computes Current Assets, Current Liabilities, current ratio, Working Capital

##### Solution Preview

Cash \$150,000
Accounts Receivable 65,000
Inventory 100,000
Store Eq(net) 200,000
Total Current Assets: \$515,000
Other Assets 50,000
\$565,000

Note Payable(due in 10 days)... 135,000
Accounts payable... 75,000
Total current liabilities 210,000

Mortgage Payable(due in 3years)... 140,000

Capital Stock... 50,000
Retained Earnings... 165,000
565,000

A)rom the ...

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