The balance sheet of Hemp Ltd at 30 June 2016 showed: noncurrent assets $500 000;noncurrent liabilities $320 000;total liabilities $400 000;and shareholders' equity $300 000.What was the working capital of Hemp Ltd at 30 June 2016?
A) $120 000
B) $180 000
C) $200 000
D) $300 000

Question

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. Given total liabilities are $400,000 and noncurrent liabilities are $320,000, current liabilities are $80,000. Shareholders' equity is $300,000, so total assets are $700,000 ($400,000 liabilities + $300,000 equity). Noncurrent assets are $500,000, so current assets are $200,000. Therefore, working capital is $200,000 - $80,000 = $120,000.

The Balance Sheet of Hemp Ltd at 30 June 2016