In: Accounting
Presented below are the ending balances of accounts for the
Kansas Instruments Corporation at December 31, 2021.
Account Title | Debits | Credits | ||||
Cash | $ | 34,000 | ||||
Accounts receivable | 158,000 | |||||
Raw materials | 38,000 | |||||
Notes receivable | 114,000 | |||||
Interest receivable | 17,000 | |||||
Interest payable | $ | 19,000 | ||||
Investment in debt securities | 46,000 | |||||
Land | 64,000 | |||||
Buildings | 1,580,000 | |||||
Accumulated depreciation—buildings | 634,000 | |||||
Work in process | 56,000 | |||||
Finished goods | 103,000 | |||||
Equipment | 328,000 | |||||
Accumulated depreciation—equipment | 144,000 | |||||
Patent (net) | 134,000 | |||||
Prepaid rent (for the next two years) | 74,000 | |||||
Deferred revenue | 50,000 | |||||
Accounts payable | 194,000 | |||||
Notes payable | 540,000 | |||||
Restricted cash (for payment of notes payable) | 94,000 | |||||
Allowance for uncollectible accounts | 27,000 | |||||
Sales revenue | 1,080,000 | |||||
Cost of goods sold | 464,000 | |||||
Rent expense | 42,000 | |||||
Additional Information:
Required:
Determine the company’s working capital (current assets minus
current liabilities) at December 31, 2021. (Amounts to be
deducted should be indicated by a minus sign.)
As per the Generally accepted accounting Standrads Working capital refers to the Differance between the Current assets of the Company by reducation of Current Liabilites of the Company as at date of Financial Statements i.e 31.12.2021.
Current Assets:-
Cash = 34000
Accounts Receivables = 158000
Raw Material = 38000
Notes Receivables = Nil (Notes)
Interest Receivables = Nil (Notes)
Investment in Debt Securities = Nil (Note)
Work in Process = 56000
Finished Goods = 103000
Prepaid Rent = 37000 (Note)
Restricted Cash = Nil (Note)
Current Liabilities:-
Interest Payable = 19000
Deferred Revenue = 50000
Accounts Payables = 194000
Notes Payable = Nil (Note)
NET WORKING CAPITAL = Current Assets minus Current Liabilities = 426000-263000 = 163000
NOTES:
*Notes Receivables and Interest Receivables will not a part of Current Assets because current Assets means Expected to be Converted in to Cash equivalent with in period of One Year and Further it can be Defined as which can be recovered in a normal operating cycle.
* Investment in Debt Securities will be form a part of Long term Investments Only.
*Prepaid Rent can be considered as Current Assets , however in the Present exercise prepaid belongs to two year so first Calendar year can be consider as a current assets pertains to the amount.
*Restricted Cash is belongs to Notes Payables only, So Notes Payable having the Life term of Five Years so it will not form a part of Current Liabilities so that restricted cash will also not form a part Current Liabilities.
*Land, Building, Equipment will form a part of Fixed Assets
*Sales, COGS and Rental Expenses items relating to the Profit and Loss Accounts, the same will ignored in computation of Working Capital of the Company