Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. The total amount of working capital for Layton Novelties is
A) $8,000.
B) $28,000.
C) $12,000.
D) $4,000.

Question

Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios.   The total amount of working capital for Layton Novelties is
A) $8,000. 
B) $28,000. 
C) $12,000. 
D) $4,000.

Quizplus · Accepted Answer

Working capital is calculated by subtracting current liabilities from current assets. In this case, current assets are $47,000 and current liabilities are $35,000, so working capital is $12,000. Therefore, the correct answer is C.

Use This Balance Sheet and Income Statement for the First