The financial statements for Uptown Service Company include the following items: $\begin{array}{lrr}
&2019&2018\
\text { Cash } & \$ 50,500 & \$ 40,000 \
\text { Short-term Investments } & 32,000 & 11,000 \
\text { Net Accounts Receivable } & 52,000 & 55,000 \
\text { Merchandise Inventory } & 157,000 & 49,000 \
\text { Total Assets } & 531,000 & 554,000 \
\text { Accounts Payable } & 124,500 & 124,000 \
\text { Salaries Payable } & 16,000 & 18,000 \
\text { Long-term Note Payable } & 56,000 & 52,000
\end{array}$
Compute working capital for 2019.
A) $135,000
B) $95,000
C) $151,000
D) $31,000

Question

The financial statements for Uptown Service Company include the following items: $\begin{array}{lrr}
&2019&2018\
\text { Cash } & \$ 50,500 & \$ 40,000 \
\text { Short-term Investments } & 32,000 & 11,000 \
\text { Net Accounts Receivable } & 52,000 & 55,000 \
\text { Merchandise Inventory } & 157,000 & 49,000 \
\text { Total Assets } & 531,000 & 554,000 \
\text { Accounts Payable } & 124,500 & 124,000 \
\text { Salaries Payable } & 16,000 & 18,000 \
\text { Long-term Note Payable } & 56,000 & 52,000
\end{array}$
 Compute working capital for 2019.
A) $135,000
B) $95,000
C) $151,000
D) $31,000

Quizplus · Accepted Answer

Working capital is calculated as Current Assets minus Current Liabilities. For 2019, Current Assets = Cash + Short-term Investments + Net Accounts Receivable + Merchandise Inventory = $50,500 + $32,000 + $52,000 + $157,000 = $291,500. Current Liabilities = Accounts Payable + Salaries Payable = $124,500 + $16,000 = $140,500. Therefore, working capital for 2019 = $291,500 - $140,500 = $151,000.

The Financial Statements for Uptown Service Company Include the Following