Question

question 2 (10 points)
as of december 31, the stanford company has the following information. use this information to answer questions 1 to 3.

cash: $5,000
accounts receivable: 15,000
inventory: 40,000
prepaid insurance: 3000
fixed assets: 100,000
accounts payable: 15,000
notes payable in 5 months: 12,500
salary payable: 25,000
notes payable in 5 years: 35,000
owners equity: 98,000

1. what is the companys working capital?

12,500
10,500
15,000
15,500

Explanation:

Identify current assets

Using the Account Classification knowledge point

$$
LATEXBLOCK0
$$

Identify current liabilities

Using the Current Liabilities knowledge point

$$
LATEXBLOCK1
$$

Calculate working capital

Calculate the difference between current assets and current liabilities.

$$
LATEXBLOCK2
$$

Answer:

• (A) 12,500
• (B) 10,500 (Correct answer)
• (C) 15,000
• (D) 15,500