Diane Corporation is preparing its year-end balance sheet. The company records show the following selected amounts at the end of the year:

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	$	630,000
Total noncurrent assets		346,000
Liabilities:
Notes payable (8%, due in 5 years)		19,000
Accounts payable		54,000
Income taxes payable		12,000
Liability for withholding taxes		5,000
Rent revenue collected in advance		10,000
Bonds payable (due in 15 years)		99,000
Wages payable		10,000
Property taxes payable		6,000
Note payable (10%, due in 6 months)		15,000
Interest payable		700
Common stock		130,000

 
Required:

1-a. What is the amount of current liabilities?

Here

Explanation:

1.

Current assets				$	284,000
Current liabilities:
Accounts payable	$	54,000
Income taxes payable		12,000
Liability for withholding taxes		5,000
Rent revenue collected in advance		10,000
Wages payable		10,000
Property taxes payable		6,000
Note payable, 10% (due in 6 months)		15,000
Interest payable		700			(112,700	)
Working capital (current assets – current liabilities)				$	171,300

Working capital is critical for the efficient operation of a business. The working capital accounts are actively managed to achieve a balance between a company’s short-term obligations and the resources needed to satisfy those obligations. If a business has too little working capital, it runs the risk of not being able to meet its obligations. If it has too much working capital, it runs the risk of tying up resources in unproductive assets.

2.
No. If the contingent liabilities are reported in the notes then they would not affect working capital.