Question: The balance sheet of a limited company as on 31st December, 1958, was as follows
Re-printed by courtesy of the Royal Society of Arts (R.S.A.).
(a) What was the amount of the company's working capital at that date?
(b) During the year ended 31st December, 1959, the company earned a net profit of £19,700 after charging £4,800 for depreciation of the fixed assets, new fixed assets were brought at a cost of £18,600 and old ones sold for £1,300. Calculate the amount of working capital at the end of the year.
(c) The following appropriations are proposed out of the profit for 1959: the transfer of £5,000 to General Reserve and the declaration of dividends amounting to £7,500. What effect will each of these have on the working capital, and why?