Homework Answers
1 Depreciation expense for 2019 = $62,600
2 Cash spent for equipment = $104,000
3 Cash inflow from disposal of equipment = $7,500
Working
1 Opening balance in accumulated depreciation = 108,000
accumulated depreciation on asset sold = 36,700
Hence, balance in accumulated depreciation should have been = 108000-36700= $71,300
But the balance is 133,900. Hence, depreciation expense for 2019 = 133900-71300 = $62,600
2 Cost of equipment at 2018 = 262,000
Cost of asset sold = 41,000
Hence, post disposal cost of equipmnent should have been = 262000-41000 = $221,000
However in 2019, the cost of equipmnent is 325,000. Hence, equipment purchased during the period = 325000-221000 = $104,000
3 Book value of equipment sold = 41000-36700 = $4,300
It was sold for cash producing gain of $3,200
Hence, cash received = 4300+3200 = $7,500
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Comparative Balance Sheets
December 31
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2020
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$47,000
Accounts receivable
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56,800
Inventory
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201,000
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