Cash $40,000
Accounts receivable $120,000
Inventory $300,000
Prepaid rent $2,000
Accounts payable $150,000
Salaries payable $7,000
Long-term bonds payable $200,000
The selected accounts above are from TJ Supply’s balance sheet. What is TJ Supply’s working capital?
working capital = current assets - current liabilities but which of these count as current assets and which are current liabilities?
if totatl is assets is 44000 JD and total liabilities is 16000 JD and retained earnings 6000 JD . compute share capital
To determine which accounts count as current assets and current liabilities, you need to understand their characteristics.
Current assets are those that are expected to be converted into cash within one year or the operating cycle of the company, whichever is longer. This includes assets like cash, accounts receivable, and inventory.
Current liabilities are obligations that are due within one year or the operating cycle of the company, whichever is longer. This includes liabilities like accounts payable and salaries payable.
Based on this information, the current assets and current liabilities in the given list are as follows:
Current assets:
- Cash: $40,000
- Accounts receivable: $120,000
- Inventory: $300,000
- Prepaid rent: $2,000 (It is not explicitly mentioned, but prepaid expenses typically count as current assets)
Current liabilities:
- Accounts payable: $150,000
- Salaries payable: $7,000
Now that we have identified the current assets and current liabilities, we can calculate the working capital:
Working capital = Current assets - Current liabilities
Working capital = ($40,000 + $120,000 + $300,000 + $2,000) - ($150,000 + $7,000)
Working capital = $462,000 - $157,000
Working capital = $305,000
Therefore, TJ Supply's working capital is $305,000.