Diane Corporation is preparing its year-end balance sheet. The company records s

Question

Diane Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year Total assets Total noncurrent assets Liabilities 340,000 Notes payable (8%, due in 5 years) Accounts payable Income taxes payable iability for withholding taxes Rent revenue collected in advance Bonds payable (due in 15 years) Wages payable Property taxes payable Note payable (10%, due in 6 months) Interest paya 22,000 51,000 11,000 5,000 11000 102,000 11,000 7,000 13,000 800 Common stock Required: 1-a. what is the amount of current liabilities? 1-b. Compute working capital it the company reported $280,000 worth of contingent liabilities in the notes to its financial statements? No

Explanation / Answer

Answer to part 1:

Answer to part 2:

working capital = Current Assets - Current Liabilities

working capital = total assets - non current assets - current liabilities.

working capital =540000 - 340000 - 109800

working capital= $ 90200.

Answer to part 3:

No, as contingent liabilities will not form part of current liabilities.

Particulars $ Accounts Payable 51000 Income tax payable 11000 Liability for withholding taxes 5000 Rent revenue collected in advance 11000 Wages payable 11000 property taxes payable 7000 Notes payable 13000 Interest Payable 800 Total Current Liabilities 109800

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