Required: Determine the company's working capital (current assets minus current liabilities) at December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.) Current assets: Cash Accounts receivable Allowance for uncollectible accounts Notes receivable Interest receivable Investment in debt securities Raw materials Work in process Finished goods Prepaid rent Total current assets Current liabilities: Deferred revenue Accounts payable Interest payable Total current liabilities Working capital
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Presented below are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021.
| Account Title | Debits | Credits | ||||
| Cash | $ | 31,000 | ||||
| 152,000 | ||||||
| Raw materials | 35,000 | |||||
| Notes receivable | 111,000 | |||||
| Interest receivable | 14,000 | |||||
| Interest payable | $ | 16,000 | ||||
| Investment in debt securities | 43,000 | |||||
| Land | 61,000 | |||||
| Buildings | 1,520,000 | |||||
| 631,000 | ||||||
| Work in process | 53,000 | |||||
| Finished goods | 100,000 | |||||
| Equipment | 322,000 | |||||
| Accumulated depreciation—equipment | 141,000 | |||||
| Patent (net) | 131,000 | |||||
| Prepaid rent (for the next two years) | 71,000 | |||||
| Deferred revenue | 47,000 | |||||
| Accounts payable | 191,000 | |||||
| Notes payable | 510,000 | |||||
| Restricted cash (for payment of notes payable) | 91,000 | |||||
| Allowance for uncollectible accounts | 24,000 | |||||
| Sales revenue | 1,020,000 | |||||
| Cost of goods sold | 461,000 | |||||
| Rent expense | 39,000 | |||||
Additional Information:
- The notes receivable, along with any accrued interest, are due on November 22, 2022.
- The notes payable are due in 2025. Interest is payable annually.
- The investment in debt securities consist of treasury bills, all of which mature next year.
- Deferred revenue will be recognized as revenue equally over the next two years.
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