Question

Assume Net Property Plant and Equipment was $1,800,000 at the beginning of the year and was...

Assume Net Property Plant and Equipment was $1,800,000 at the beginning of the year and was $1,650,000 at the end of the year. The Income Statement indicates that Depreciation Expense was $261,000 and we know plant assets were sold for $60,000 cash and a $12,000 Gain on sale of Plant Assets was reported on the Income Statement. We do not know the cash paid for purchases but we can calculate the amount.   Use the T account below to assist in the calculation.

                      Net Plant Assets

Begin Bal

Depreciation

NBV sold

Equip purchased

Ending Bal

Include the beginning and ending balances on the correct side of the T-account.

Show the Depreciation Expense appropriately in the T account above.

Calculate the Net Book Value of the assets sold appropriately in the T account such that the total debits equals total credits in the journal entry below.

dr. Cash__60,000_______

cr. Gain on sale___12,000______

cr. Net Plant Assets_______________

Include the NBV of Plant Assets sold correctly in the T account above.

Solve for the “gray shaded” box as purchases.

Complete the Investing activity section of the Statement of Cash Flows. Remember to report only the “cash” flows. (The part of the journal entries that affect the account cash.

Investing activity:

Cash paid for purchase of Plant Assets______________

Cash received from sale of Plant Assets______________

Net Cash used for Investing Activities$_____________             

Homework Answers

Answer #1

Working Note:

1. Since the asset is sold for 60,000 and a gain on sale of 12,000 is recorded, it means the asset was carrying a book value of 48,000 (60,000 -12,000).

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