Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios. The total amount of working capital for Cane Construction is
A)$4,000.
B)$14,000.
C)$6,000.
D)$2,000.

Question

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.   The total amount of working capital for Cane Construction is
A)$4,000. 
B)$14,000. 
C)$6,000. 
D)$2,000.

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. The total current assets for Cane Construction is $20,000 and the total current liabilities is $14,000. Therefore, working capital is $6,000 ($20,000 - $14,000).

Use This Balance Sheet and Income Statement for the First