Question

Joe Fellows is attempting to categorize several items from his company’s financial statements so he can determine his working capital. Joe notices the following categories of accounts and amounts: cash, $3,670; accounts payable, $10,372; accounts receivable, $14,796; sales taxes due city of Phoenix, $808; sales taxes due the Arizona Department of Revenue, $3,802; inventory, $17,811; wages payable, $5,323; taxes payable (federal), $2,628; money market fund, $12,011; and computer, $3,524. What is the amount of net working capital?

Answer 1

The amount of net working capital is $25,355

Step-by-step explanation:

In this question, we are asked to calculate the amount of net working capital for the Joe fellows company.

Mathematically, the net working capital = Current assets - Current liabilities

We calculate the value of the current assets as follows using the values provided in the question;

Current assets = Cash + Account Receivables + Inventory + Money market = 3,670 + 14,796 + 17,811 + 12,011 = $48,288

We calculate the current liabilities using the information obtained from the question as follows;

Current liabilities = Accounts Payable + sales-tax due to Phoenix City+ sales tax due to Arizona revenue department + wage payable + tax payable = 10,372 + 808 + 3,802 + 5,323 + 2,628 = 22,933

Thus, the net working capital = $48,288 - $22,933 = $25,355