A Corporation Had the Following Assets and Liabilities What Is the Amount of Working Capital and the Working

question 70

Multiple Choice

A corporation had the following assets and liabilities: $$\begin{array} { | l | c | l | l | } \hline \text { Assets } & & { \text { Liabilities } } & \\\hline \text { Cash } & \$ 2,000 & \text { Accounts pay able } & \$ 2,400 \\\hline \text { Accounts receivable } & 8,400 & \text { Wages payable } & 8,000 \\\hline \text { Inventory } & 7,000 & \text { Interest payable } & 6,000 \\\hline \text { Equipment } & 22,000 & \text { Bonds pay able } & 14,000 \\\hline\end{array}$$ What is the amount of working capital and the working capital ratio? $$\begin{array} { | l| l | l | } \hline& \text { Wrorking Capital Amount}&\text {working Capital Ratio } \\\hline 1& \$ 6,400 & 1.10 \\\hline 2& \$ 1,000 & 1.30 \\\hline 3& \$ 1,000 & 1.06 \\\hline 4& \$ 9,000 & 1.30 \\\hline\end{array}$$

• A) Choice 1
• B) Choice 2
• C) Choice 3
• D) Choice 4

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Definitions:

Financial Statements

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Impairments

Reductions in the recoverable value of fixed assets or goodwill on a company’s balance sheet, indicating that the asset is not worth its currently stated value.

Property, Plant, Equipment

Tangible assets that are used in the operations of a business, have a longer life, and are not intended for sale, including buildings, machinery, and vehicles.

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its principal (face value), reflecting superior credit quality or lower market interest rates.