The following amounts were reported on the December 31, 2019, balance sheet: $$\begin{array} { l r }
\text { Cash } &\$ 8,000 \
\text { Land } & 20,000 \
\text { Accounts payable } & 15,000 \
\text { Bonds payable } & 120,000 \
\text { Merchardise irventory } & 30,000 \
\text { Retained earnirgs } & 80,000 \
\text { Buildings and equipment, net of accumulated depreciation } & 180,000 \
\text { Accounts receivable } & 22,000 \
\text { Common stock } & 40,000 \
\text { Wages payable } & 5,000
\end{array}$$ Working capital at December 31, 2019 was:
A)$10,000.
B)$40,000.
C)$60,000.
D)$120,000.

Question

The following amounts were reported on the December 31, 2019, balance sheet: $$\begin{array} { l r } 
\text { Cash } &\$ 8,000 \
\text { Land } & 20,000 \
\text { Accounts payable } & 15,000 \
\text { Bonds payable } & 120,000 \
\text { Merchardise irventory } & 30,000 \
\text { Retained earnirgs } & 80,000 \
\text { Buildings and equipment, net of accumulated depreciation } & 180,000 \
\text { Accounts receivable } & 22,000 \
\text { Common stock } & 40,000 \
\text { Wages payable } & 5,000
\end{array}$$ Working capital at December 31, 2019 was:
A)$10,000.
B)$40,000.
C)$60,000.
D)$120,000.

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. Current assets include cash ($8,000), accounts receivable ($22,000), and merchandise inventory ($30,000), totaling $60,000. Current liabilities include accounts payable ($15,000) and wages payable ($5,000), totaling $20,000. Therefore, working capital is $60,000 - $20,000 = $40,000.

The Following Amounts Were Reported on the December 31, 2019