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on December 31, 20--, the following selected accounts and amounts appeared on the balancesheet for Duncan Company. Determine the amount of the working capital and the current ratio.Building $180,000Prepaid Insurance $1,800Merchandise Inventory $85,000Store Equipment $11,000Unearned fees $1,200Notes Payable (due in six months) $6,000Accumulated Depreciation, Building $62,000Accounts payable $25,000Land $50,000Cash $50,000Store Supplies $1,400Accumulated Depreciation, Store Equipment $8,000Notes Receivable (due in four months ) $1,500Mortgage Payanle (current portion) $4,400Salaries Payable $1,600M. Duncan, Capital $161,500Mortgage Payable (due in four years ) 86,000Working capital ______$Current ratio ______$

Sagot :

According to the following situation, the working capital of Duncan company is $ 101,500 and the current ratio of Duncan company is $ 3.66.

What is working capital?

Working capital, often known as net working capital, is the distinction between current assets and current liabilities for a business.

A company's working capital is a gauge of its liquidity and immediate financial stability.

A corporation that has sufficient working capital is able to finance both its ongoing operations and its expansion plans.

Here,

Total of Current assets = Prepaid Insurance + Merchandise Inventory + Cash +  Store Supplies + Notes Receivable

Total of Current assets =  $1,800 + $85,000 + $50,000 + $1,400 + $1,500

Total of Current assets =  $ 139, 700

Total of current liabilities =  Unearned fees + Notes Payable + Mortgage Payable + Accounts payable + Salaries Payable

Total of current liabilities = $1,200 +  $6,000 + $4,400 + $25,000 +  $1,600

Total of current liabilities = $ 38,200

Working capital = Current assets - current liabilities

Working capital = $ 139,700 - $ 38,200

Working capital = $ 101,500.

Current ratio = Current assets / Current liabilities

Current ratio = $ 139,700 / $ 38,200

Current ratio = $ 3.66

Therefore, the the working capital of Duncan company is $ 101,500 and the current ratio of Duncan company is $ 3.66.

To know more about the working capital, visit:

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