The balance sheet of Hemp Ltd at 30 June 2012 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 2012?

Question

Quizplus · Accepted Answer

Working capital is calculated as Current Assets - Current Liabilities.
Since the question does not provide the current assets and current liabilities, we cannot directly calculate the working capital.
However, we can use the formula Total Assets = Current Assets + Noncurrent Assets and rearrange it to find Current Assets = Total Assets - Noncurrent Assets.
Using the numbers given in the question,
Current Assets = Total Assets - Noncurrent Assets
Current Liabilities = Total Liabilities - Noncurrent Liabilities
= $400,000 - $320,000
= $80,000

Total Assets = Noncurrent Assets + Current Assets
= $500,000 + Current Assets

Substituting these values, we have
$500,000 + Current Assets = $80,000 + $400,000 + $300,000
Current Assets = $180,000

Therefore, Working Capital = Current Assets - Current Liabilities
= $180,000 - $80,000
= $100,000

Therefore, the correct choice is B ($120,000).

The Balance Sheet of Hemp Ltd at 30 June 2012