Data from Dunshee Corporation's most recent balance sheet appear below:
$\begin{array}{lrr}
&\text { Year 2 } & \text { Year 1 } \\text { Current assets: }\
\text { Cash}&\$ 130 & \$ 100 \
\text { Accounts receivable, net.}&270 & 290 \
\text {Inventory }&90 & 110 \
\text {Prepaid expenses }&10 & 10\
\text { Total current assets. }&\$500&\$510\
\text { Total current liabilities }&\$230&\$220
\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
-The working capital at the end of Year 2 is:
A) $270
B) $500
C) $770
D) $740

Question

Data from Dunshee Corporation's most recent balance sheet appear below:
 $\begin{array}{lrr}
&\text { Year 2 } & \text { Year 1 } \\text { Current assets: }\
\text { Cash}&\$ 130 & \$ 100 \
\text { Accounts receivable, net.}&270 & 290 \
\text {Inventory }&90 & 110 \
\text {Prepaid expenses }&10 & 10\
\text { Total current assets. }&\$500&\$510\
\text { Total current liabilities }&\$230&\$220
\end{array}$ Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
-The working capital at the end of Year 2 is:
A) $270
B) $500
C) $770
D) $740

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. At the end of Year 2, the working capital is $500 (total current assets) - $230 (total current liabilities) = $270.

Data from Dunshee Corporation's Most Recent Balance Sheet Appear Below