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Calculating Working Capital

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 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 ...

Solution Summary

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

$2.19