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  • Dec 9, 2010, 09:21 PM
    ikeprinkess
    Determine Working Capital from a partial balance sheet
    Presented below is a partial trial balance for the Kansas Instruments Corporation at December 31, 2011.

    Account Title Debits Credits
    Cash 22,000
    Accounts receivable 141,000
    Raw materials 33,000
    Note receivable 114,000
    Interest receivable 3,400
    Interest payable 4,000
    Marketable securities 35,000
    Land 49,000
    Buildings 1,350,000
    Accumulated depreciation—buildings 670,000
    Work in process 42,000
    Finished goods 91,000
    Equipment 360,000
    Accumulated depreciation—equipment 137,000
    Patent (net of amortization) 126,000
    Prepaid rent (for the next two years) 64,000
    Unearned revenue 36,000
    Accounts payable 174,000
    Note payable 410,000
    Cash restricted for payment of note payable 71,000
    Allowance for uncollectible accounts 11,900
    Sales revenue 780,000
    Cost of goods sold 460,000
    Rent expense 26,000

    Additional information:
    1.

    The note receivable, along with any accrued interest, is due on November 22, 2012.
    2.

    The note payable is due in 2015. Interest is payable annually.
    3.

    The marketable securities consist of treasury bills, all of which mature in the next year.
    4.

    Unearned revenue will be earned equally over the next two years.

    Required:

    Determine the company's working capital at December 31, 2011. (Omit the "$" sign in your response.)

    This is my problem,

    I have
    Current Asset
    Cash 22,000
    A/R 141,000 - 11,900 ( allowance )
    Note Receivable 114,000
    Interest Receivable 3,400
    Prepaid rent 64,000
    Marketable securities 35,000
    Raw materials + WIP + finish goods = 33k+42k+91K = 166k

    Current liabilites:
    Current maturity of long term liability 71,000
    Interest payable 4,000
    Unearn revenue 36,000
    And Account payable 174,000

    so I have 533,500-285,000 = 248,500 But somehow it is not correct. Please help me! What did I do wrong?
  • Dec 9, 2010, 09:54 PM
    Just Looking

    You are pretty close. The issues are:

    Prepaid rent is for 2 years.
    Unearned revenue is for 2 years.

    Current amounts should only be those receivable or due within one year.

    You aren't understanding the definition of cash restricted. This is actually cash put aside for a specific use, in this case towards paying off the long term debt. As cash, it is an asset - whether it is current or long-term depends on its intended use. If it's set aside for a long-term obligation, it is not current.

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