Question

On January 1,2013, James Company reported total current assets of $658,000 and total current liabilities of $365,000. During the year, James purchased $2,000 worth of equipment for cash, paid $560 towards salaries, and borrowed $80,000 from its bank to be repaid after 5 years. Compute James' working capital as of December 31, 2013.

A. $293,000
B. $335,400
C. $370,440
D. $290,440

Answer 1

Answer: Option (C) is correct.

Step-by-step explanation:

Total current assets = $658,000

Current Assets = total current assets - purchased equipment - salaries paid + Borrowings

= $658,000 - $2000 - $560 + $80000

= $735,440

Total current liabilities = $365,000

Working Capital of James as on December 31, 2013:

= Current Assets - Current Liabilities

= $735,440 - $365,000

= $370,440