Question

In: Accounting

Presented below are the ending balances of accounts for the Kansas Instruments Corporation at December 31,...

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:

  1. The notes receivable, along with any accrued interest, are due on November 22, 2022.
  2. The notes payable are due in 2025. Interest is payable annually.
  3. The investment in debt securities consist of treasury bills, all of which mature next year.
  4. Deferred revenue will be recognized as revenue equally over the next two years.


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.)

Solutions

Expert Solution

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


Related Solutions

The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company. Account Title Debits Credits Cash $ 105,000 Accounts receivable 200,000 Inventory 305,000 Prepaid expenses 188,000 Equipment 360,000 Accumulated depreciation $ 130,000 Investments 180,000 Accounts payable 80,000 Interest payable 40,000 Deferred revenue 100,000 Income taxes payable 50,000 Notes payable 300,000 Allowance for uncollectible accounts 36,000 Common stock 420,000 Retained earnings 182,000 Totals $ 1,338,000 $ 1,338,000 Additional information: Prepaid expenses include $160,000 paid on...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company.Account TitleDebitsCreditsCash$83,000Accounts receivable178,000Inventory294,000Prepaid expenses166,000Equipment338,000Accumulated depreciation$119,000Investments158,000Accounts payable69,000Interest payable29,000Deferred revenue89,000Income taxes payable39,000Notes payable245,000Allowance for uncollectible accounts25,000Common stock409,000Retained earnings193,000Totals$1,217,000$1,217,000Additional information: 1. Prepaid expenses include $138,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility. 2. Investments include $39,000 in Treasury bills purchased on November 30, 2021. The bills mature on January 30, 2022. The remaining $119,000...
The following is the ending balances of accounts at December 31, 2021, for the Vosburgh Electronics...
The following is the ending balances of accounts at December 31, 2021, for the Vosburgh Electronics Corporation. Account Title Debits Credits Cash 69,000 Short-term investments 184,000 Accounts receivable 125,000 Long-term investments 36,000 Inventory 216,000 Receivables from employees 41,000 Prepaid expenses (for 2022) 17,000 Land 281,000 Building 1,560,000 Equipment 638,000 Patent (net) 153,000 Franchise (net) 41,000 Notes receivable 255,000 Interest receivable 13,000 Accumulated depreciation—building 621,000 Accumulated depreciation—equipment 211,000 Accounts payable 190,000 Dividends payable (payable on 1/16/2022) 11,000 Interest payable 17,000 Income...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company. Account Title Debits Credits Cash $ 67,000 Accounts receivable 162,000 Inventory 286,000 Prepaid expenses 150,000 Equipment 322,000 Accumulated depreciation $ 111,000 Investments 142,000 Accounts payable 61,000 Interest payable 21,000 Deferred revenue 81,000 Income taxes payable 31,000 Notes payable 205,000 Allowance for uncollectible accounts 17,000 Common stock 401,000 Retained earnings 201,000 Totals $ 1,129,000 $ 1,129,000 Additional information: Prepaid expenses include $122,000 paid on...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing...
The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company. Account Title Debits Credits Cash $ 103,000 Accounts receivable 198,000 Inventory 304,000 Prepaid expenses 186,000 Equipment 358,000 Accumulated depreciation $ 129,000 Investments 178,000 Accounts payable 79,000 Interest payable 39,000 Deferred revenue 99,000 Income taxes payable 49,000 Notes payable 295,000 Allowance for uncollectible accounts 35,000 Common stock 419,000 Retained earnings 183,000 Totals $ 1,327,000 $ 1,327,000 Additional information: Prepaid expenses include $158,000 paid on...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation. Account Title Debits Credits Cash 32,000 Accounts receivable 70,000 Inventories 95,000 Interest payable 17,000 Marketable securities 58,000 Land 134,000 Buildings 335,000 Accumulated depreciation—buildings 107,000 Equipment 89,000 Accumulated depreciation—equipment 32,000 Copyright (net of amortization) 19,000 Prepaid expenses (next 12 months) 39,000 Accounts payable 72,000 Deferred revenues (next 12 months) 27,000 Notes payable 285,000 Allowance for uncollectible accounts 7,000 Common stock 270,000 Retained earnings 54,000...
The following is the ending balances of accounts at December 31, 2021, for the Vosburgh Electronics...
The following is the ending balances of accounts at December 31, 2021, for the Vosburgh Electronics Corporation. Account Title Debits Credits Cash 91,000 Short-term investments 206,000 Accounts receivable 147,000 Long-term investments 47,000 Inventory 227,000 Receivables from employees 52,000 Prepaid expenses (for 2022) 28,000 Land 292,000 Building 1,670,000 Equipment 649,000 Patent (net) 164,000 Franchise (net) 52,000 Notes receivable 310,000 Interest receivable 24,000 Accumulated depreciation—building 632,000 Accumulated depreciation—equipment 222,000 Accounts payable 201,000 Dividends payable (payable on 1/16/2022) 22,000 Interest payable 28,000 Income...
The following is the ending balances of accounts at December 31, 2016, for the Vosburgh Electronics...
The following is the ending balances of accounts at December 31, 2016, for the Vosburgh Electronics Corporation.   Account Title Debits Credits   Cash 97,000   Short-term investments 212,000   Accounts receivable 153,000   Long-term investments 50,000   Inventories 230,000   Loans to employees 55,000   Prepaid expenses (for 2017) 31,000   Land 295,000   Building 1,700,000   Machinery and equipment 652,000   Patent 167,000   Franchise 55,000   Note receivable 325,000   Interest receivable 27,000   Accumulated depreciation—building 635,000   Accumulated depreciation—equipment 225,000   Accounts payable 204,000   Dividends payable (payable on 1/16/17) 25,000   Interest payable 31,000   Taxes...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation. Account Title Debits Credits Cash 31,000 Accounts receivable 68,000 Inventories 93,000 Interest payable 16,000 Marketable securities 56,000 Land 132,000 Buildings 330,000 Accumulated depreciation—buildings 106,000 Equipment 87,000 Accumulated depreciation—equipment 31,000 Copyright (net of amortization) 18,000 Prepaid expenses (next 12 months) 38,000 Accounts payable 71,000 Deferred revenues (next 12 months) 26,000 Notes payable 280,000 Allowance for uncollectible accounts 6,000 Common stock 260,000 Retained earnings 57,000...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump...
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation. Account Title Debits Credits Cash 35,000 Accounts receivable 76,000 Inventories 101,000 Interest payable 20,000 Marketable securities 64,000 Land 140,000 Buildings 350,000 Accumulated depreciation—buildings 110,000 Equipment 95,000 Accumulated depreciation—equipment 35,000 Copyright (net of amortization) 22,000 Prepaid expenses (next 12 months) 42,000 Accounts payable 75,000 Deferred revenues (next 12 months) 30,000 Notes payable 300,000 Allowance for uncollectible accounts 5,000 Common stock 300,000 Retained earnings 50,000...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT