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In: Accounting

ohnson Company had the following selected account balances:      Cash, $20,000      Accounts Receivable, $22,000     ...

ohnson Company had the following selected account balances:

     Cash, $20,000

     Accounts Receivable, $22,000

     Merchandise Inventory, $48,000

     Equipment, $100,000

     Accounts Payable, $26,000

     Note Payable due in six months, $12,000

     Mortgage Payable due in five years, $75,000

What is Johnson Company's working capital?

Multiple Choice

$2,000

$52,000

$62,000

$77,000

Solutions

Expert Solution

Answers : -

Working Capital = $52,000

Calculations : -

Working capital = Current Assets - Current Liabilities

= $90,000 - $38,000 = $52,000.

Current assets = $20,000 (cash) + $22,000(receivables) + $48,000( inventory)

Current liabilities = $26,000 ( payable) + $12,000 (notes payable)

Equipment is not a current asset and mortgage is not a current liability

ekkarill92 answered 2 years ago
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