Question

"Use the following information for the Quick Study below. The plant assets section of the comparative balance sheets of Anders Company is reported below.
ANDERS COMPANY
Comparative Balance Sheets
2017 2016
Plant assets
Equipment $195,000 $285,000
Accum. Depr.—
Equipment (106,000) (216,000)
Equipment, net $89,000 $69,000
Buildings $395,000 $415,000
Accum. Depr.—
Buildings (109,000 ) (294,000 )
Buildings, net $286,000 $121,000"
QS 16-5 Indirect: Computing investing cash flows LO P2
During 2017, equipment with a book value of $43,000 and an original cost of $225,000 was sold at a loss of $3,600.
1. How much cash did Anders receive from the sale of equipment?
2. How much depreciation expense was recorded on equipment during 2017?
3. What was the cost of new equipment purchased by Anders during 2017?

Answer 1

Answer:

(1) cash fro msale of equipment 39,400

(2) depreciation expense 72,000

(3) Purchase of equipment = 135,000

Explanation:

(1) cash proceeds = book value +/- Gain/Loss on sales

43,000 - 3,600 = 39,400

(2)

Acc depreciation beginning + current year dep expense - equipment sold = acc dep ending

216,000 + X -(225,000-43,000) = 106,000

depreciation expense =  106,000 -216,000 + 182,000

72,000

(3)

Beginning Equipment - sold equipment + purchase equipment = Ending Equipment

285,000 - 225,000 +Purchase = 195,000

Purchase = 195,000 - 60,000

Purchase = 135,000