Question

BobCat Inc. has cash of $22,000, accounts receivable of $78,000, inventory of $62,000, prepaid insurance 8,000 and land of $90,000. The company has only one current liability account- salary payable of $64,000, what is working capital

Answer 1

Answer:$106000

Step-by-step explanation:

Calculation of current assets

Cash 22000

Accounts receivable 78000

Inventory 62000

Prepaid insurance 8000

Total current assets 170000

Given

Current Liabilities = 64000

Working capital = current assets - current liabilities

=170000 - 64000

Working capital of Bob Cat Inc is $106000

Here land is a fixed asset hence cannot be included in working capital. Current assets are the assets which can be liquidated quickly into cash. Current liabilities are the liabilities which will be paid of immediately.