Question

The following selected account balances relate to the property, plant, and equipment accounts of Blossom Inc.:

		2018		2017
Accumulated depreciation—buildings		$335,000		$300,000
Accumulated depreciation—equipment		144,000		95,000
Depreciation expense—buildings		35,000		35,000
Depreciation expense—equipment		60,000		49,000
Land		100,000		60,000
Buildings		700,000		700,000
Equipment		300,000		240,000
Gain on disposal (equipment)		4,000		0

Additional information:

1.		Purchased $40,000 of land for cash.
2.		Purchased $75,000 of equipment for a $10,000 down payment, financing the remainder with a bank loan. Equipment was also sold during the year.

Calculate any cash receipts or payments related to the property, plant, and equipment accounts in 2018.

Land purchase		$
Equipment purchase		$
Proceeds from disposal of equipment		$

Indicate where each of the cash receipts or payments identified above would be classified on the statement of cash flows or accompanying notes.

Land purchase		Financing activities (source)Non cash activities (use)Operating activities (source)Investing activities (use)Non cash activities (source)Investing activities (source)Operating activities (use)Financing activities (use)
Equipment purchase		Investing activities (source)Financing activities (source)Operating activities (source)Investing activities (use)Non cash activities (source)Financing activities (use)Operating activities (use)Non cash activities (use)
Proceeds from equipment disposal		Operating activities (use)Non cash activities (use)Non cash activities (source)Investing activities (source)Operating activities (source)Investing activities (use)Financing activities (source)Financing activities (use)

Note: During the year the company purchased equipment costing $________ by paying $10,000 cash and issuing a bank loan payable for $65,000.

Answer 1

Accumulated depreciation—equipment

Accumulated depreciation on equipment sold (Balancing figure)	11,000	Beginning balance	95,000
Ending baance	144,000	Depreciation expense	60,000
	155,000		155,000

Equipment

Beginning balance	240,000	Accumulated depreciation	11,000
Gain on disposal	4,000	Cash (sales) (Balancing figure)	8,000
Cash (Purchase)	10,000
Bank loan (Purchase)	65,000	Ending baance	300,000
	319,000		319,000

Land purchase = $40,000

Equipment purchase = $10,000

Proceeds from disposal of equipment = $8,000

Land purchase = Investing activities (use)

Equipment purchase =  Investing activities (use)

Proceeds from disposal of equipment =  Investing activities (source)

Note: During the year the company purchased equipment costing $75,000 by paying $10,000 cash and issuing a bank loan payable for $65,000.