Question

In: Accounting

Based on these data, calculate Patton Corporation’s working capital for Year 2.

Patton Corporation had the following items on its financial statements for two recent years: Year 2 Year 1 Sales $2,500,000 $2,000,000 Cost of goods sold 1,975,000 1,600,000 Cash 500,000 475,000 Temporary investments 150,000 150,000 Accounts receivable (net) 200,000 175,000 Inventory 325,000 300,000 Accounts payable 450,000 400,000

Based on these data, calculate Patton Corporation’s working capital for Year 2.

A) $725,000

b) $1,625,000

c) $2,050,000

d) None of these choices are correct.

Solutions

Expert Solution

Calculation of Patton Corporation's Working Capital for Year 2

Formula For Calculating Working capital = Current Assets - Current Liabilities

Cash + Temporary Investments + Accounts Receivable + Inventory - Account payable

=5,00,000 + 1,50,000 + 2,00,000 + 3,25,000 - 4,50,000

=7,25,000

Patton Corporation's Working Capital for Year 2  = $7,25,000

Option $7,25,000 is the Correct Choice

 

 


option $7,25,000 is the correct choice

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