Question

Exercise 3-6 Balance sheet; Current versus long-term classification [LO3-2, 3-3]

Presented below is the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2018.

Account Title		Debits			Credits
Cash	$	39,000
Accounts receivable		168,000
Raw materials		43,000
Note receivable		119,000
Interest receivable		22,000
Interest payable				$	24,000
Marketable securities		51,000
Land		69,000
Buildings		1,680,000
Accumulated depreciation—buildings					639,000
Work in process		61,000
Finished goods		108,000
Equipment		338,000
Accumulated depreciation—equipment					149,000
Patent (net of amortization)		139,000
Prepaid rent (for the next two years)		79,000
Deferred revenue					55,000
Accounts payable					199,000
Note payable					590,000
Cash restricted for payment of note payable		99,000
Allowance for uncollectible accounts					32,000
Sales revenue					1,180,000
Cost of goods sold		469,000
Rent expense		47,000

Additional information:

1. The note receivable, along with any accrued interest, is due on November 22, 2019.
2. The note payable is due in 2022. Interest is payable annually.
3. The marketable securities consist of treasury bills, all of which mature in the next year.
4. Deferred revenue will be recognized as revenue equally over the next two years.

Required:
Determine the company’s working capital (current assets minus current liabilities) at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)

	Current assets: Total current assets 0 Current liabilities: Total current liabilities 0 Working capital

Answer 1

SOLUTION

Particulars	Amount ($)	Amount ($)
Current assets:
Cash	39,000
Accounts receivable	168,000
Less: Allowance for uncollectible accounts	(32,000)
Notes receivable	119,000
Interest receivable	22,000
Marketable securities	51,000
Raw materials	43,000
Work in process	61,000
Finished goods	108,000
Prepaid rent (79,000/2)	39,500
Total current assets		618,500
Current liabilities:
Unearned revenue (55,000 / 2)	27,500
Accounts payable	199,000
Interest payable	24,000
Total current liabilities		250,500
Working capital		368,000