Question

Financial statements for Maraby Corporation appear below:

Maraby Corporation
Balance Sheet
December 31, Year 2 and Year 1
(dollars in thousands)
	Year 2			Year 1
Current assets:
Cash and marketable securities	$	220		$	190
Accounts receivable, net		190			160
Inventory		140			150
Prepaid expenses		70			80
Total current assets		620			580
Noncurrent assets:
Plant & equipment, net		1,180			1,150
Total assets	$	1,800		$	1,730
Current liabilities:
Accounts payable	$	100		$	120
Accrued liabilities		100			70
Notes payable, short term		160			160
Total current liabilities		360			350
Noncurrent liabilities:
Bonds payable		450			500
Total liabilities		810			850
Stockholders’ equity:
Common stock, $5 par		160			160
Additional paid-in capital		200			200
Retained earnings		630			520
Total stockholders’ equity		990			880
Total liabilities & stockholders’ equity	$	1,800		$	1,730

Maraby Corporation
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account)	$	1,960
Cost of goods sold		1,370
Gross margin		590
Selling and administrative expense		230
Net operating income		360
Interest expense		50
Net income before taxes		310
Income taxes (30%)		93
Net income	$	217

Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to:

Multiple Choice

A. $990

b. $360

c. $620

d. $260

Answer 1

Working Capital = Current Assets - Current Liabilities

= $620 - $360

=260

Cash and marketable securities	$ 220.00
Accounts receivable, net	$ 190.00
Inventory	$ 140.00
Prepaid expenses	$   70.00
Total current assets	$ 620.00

Accounts payable	$ 100.00
Accrued liabilities	$ 100.00
Notes payable, short term	$ 160.00
Total current liabilities	$ 360.00