Use the following information for the Quick Study below.
[The following information applies to the questions
displayed below.]
The plant assets section of the comparative balance sheets of
Anders Company is reported below.
| ANDERS COMPANY | |||||||||
| Comparative Balance Sheets | |||||||||
| 2019 | 2018 | ||||||||
| Plant assets | |||||||||
| Equipment | $ | 270,000 | $ | 360,000 | |||||
| Accumulated depreciation—Equipment | (136,000 | ) | (246,000 | ) | |||||
| Equipment, net | $ | 134,000 | $ | 114,000 | |||||
| Buildings | $ | 470,000 | $ | 490,000 | |||||
| Accumulated depreciation—Buildings | (154,000 | ) | (339,000 | ) | |||||
| Buildings, net | $ | 316,000 | $ | 151,000 | |||||
QS 12-10 Computing investing cash flows LO P3
During 2019, equipment with a book value of $58,000 and an
original cost of $300,000 was sold at a loss of $6,600.
1. How much cash did Anders receive from the sale
of equipment?
2. How much depreciation expense was recorded on
equipment during 2019?
3. What was the cost of new equipment purchased by
Anders during 2019?
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Answer :-
1. Cash received from the sale of equipment = Book Vlaue - Loss
Cash received from the sale of equipment = $58,000 - $6,600
Cash received from the sale of equipment = $51,400
2. Depreciation expense =(Original cost - Book value)+Ending balance of accumulated depreciation- Beginning balance of accumulated depreciation
Depreciation expense = ($300,000-$58,000) + $136,000 - $246,000
Depreciation expense = $242,000 + $136,000 - $246,000
Depreciation expense = $132,000
3. Purchase of equipment = Ending balance of equipment-(Beginning balance of equipment - Original Cost)
Purchase of equipment = $270,000 - ($360,000 - $300,000)
Purchase of equipment = $270,000 - $60,000
Purchase of equipment = $210,000
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