Question

Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600. What is the value of the current assets?

$21,600

$18,100

$28,900

$29,400

$6,800

Answer 1

Solution:

As per the basic accounting equation

Total Assets = Current Liabilities + Long term Liabilities + Owner’s equity

As per the information given in the question

Total Assets = $ 98,300 ; Long term Liabilities = Long Term debt = $ 38,600 ;

Owner’s equity $ 41,600 ; Current Liabilities = To find

Applying the above information in the basic accounting equation we have

$ 98,300 = Current Liabilities + $ 38,600 + $ 41,600

$ 98,300 = Current Liabilities + $ 80,200

$ 98,300 - $ 80,200 = Current Liabilities

Current Liabilities = $ 98,300 - $ 80,200

Current Liabilities = $ 18,100

Further as per the information given in the question

Net working Capital = $ 11,300 ; Current Liabilities = $ 18,100

Current Assets = To find

We know that Net working Capital = Current Assets – Current Liabilities

Applying the available information we have

$ 11,300 = Current Assets - $ 18,100

$ 11,300 + $ 18,100 = Current Assets

Current Assets = $ 11,300 + $ 18,100

Current Assets = $ 29,400

Thus the value of Current Assets = $ 29,400

The solution is Option 4 = $ 29,400