Macmillan Corporation has provided the following financial data: Dividends on co

Question

Macmillan Corporation has provided the following financial data:

Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share.

The company's working capital at the end of Year 2 is:

$590,000

$289,000

$732,000

$831,000

Balance Sheet
December 31, Year 2 and Year 1 Assets Year 2 Year 1 Current assets:     Cash $156,000 $120,000     Accounts receivable 268,000 280,000     Inventory 146,000 130,000     Prepaid expenses          20,000        20,000 Total current assets 590,000 550,000 Plant and equipment, net        732,000        760,000 Total assets $1,322,000 $1,310,000 Liabilities and Stockholders' Equity Current liabilities:     Accounts payable $175,000 $180,000     Accrued liabilities 46,000 50,000     Notes payable, short term          80,000    80,000 Total current liabilities 301,000 310,000 Bonds payable        190,000      190,000 Total liabilities     491,000      500,000 Stockholders' equity:    Common stock, $5 par value 450,000 450,000    Additional paid-in capital-common stock 70,000 70,000    Retained earnings       311,000     290,000 Total stockholders' equity    831,000     810,000 Total liabilities & stockholders' equity $1,322,000 $1,310,000

Explanation / Answer

Working capital at the end of year 2

= current assets – current liabilities

= 590000-301000=289000

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