Question

Michael’s Bakery had $236,400 in net fixed assets at the beginning of the year. During the year, the company purchased $53,200 in new equipment. It also sold, at a price of $22,000, some old equipment that had a book value of $5,900. The depreciation expense for the year was $13,400. What is the net fixed asset balance at the end of the year

Answer 1

Answer:

$270,300

Explanation:

Given that,

Net fixed assets at the beginning of the year = $236,400

New equipment purchased = $53,200

Old equipment sold = $22,000

Book value of old equipment = $5,900

Depreciation expense for the year = $13,400

The value of new equipment purchased added to the fixed assets, the book value of the old equipment and the depreciation expense are deducted from the fixed assets.

The sale of old equipment and depreciation expense reduces the net fixed assets, that's why it is deducted from the net fixed assets.

Net fixed assets at the end of the year:

= Beginning net fixed assets + Value of new equipment - Book value of the old equipment sold - Depreciation expense

= $236,400 + $53,200 - $5,900 - $13,400

= $270,300