Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Question: What is the ending equipment balance net of accumulated depreciation?

ID: 2522734 • Letter: Q

Question

Question: What is the ending equipment balance net of accumulated depreciation?

A. $755,000

B. $768,000

C. $775,000

D. $782,000

Softbyte Inc.

Balance Sheet

December 31, 2017

Assets

Cash                                                                                                    $500,000

Accounts Receivable                                                                        700,000                                

Inventory                                                                                           300,000

Property, Plant & Equipment                            900,000

Accumulated Depreciation                              (100,000)              800,000

Total Assets                                                                                    $2,300,000

Liabilities & Equity

Accounts Payable                                                                          $300,000

Notes Payable                                                                                  1,000,000

Common Stock                                                                                  500,000

Retained Earnings                                                                            500,000

Total Liabilities & Equity                                                        $2,300,000

Instructions:

Open the balances in the ledger accounts.

Post the journal entries to the general ledger.

Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash flows-indirect method.

Journal Entries for January 2013

Transaction 1: Services Provided for Cash

Description: Receives $155,000 cash from customers for programming services it has provided.

Journal Entry:                                                                                                                  Dr.                                 Cr.

Cash                                                                                                                                   155,000

            Sales                                                                                                                                                             155,000  

Transaction 2: Receipt of Cash on Account

Description: Receives $28,000 in cash from customers who had been billed for services.

Journal Entry:                                                                                                           Dr.                              Cr.

Cash                                                                                                                          28,000                              

          Accounts Receivable                                                                                                                                 28,000
          

Transaction 3: Cost Flow Assumption: LIFO

Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.

Journal Entry:                                                                                                                     Dr.                                  Cr.

Cost of Goods Sold                                                                                                           45,000

                    Inventory                                                                                                                                                  45,000

Transaction 4: Recording Depreciation Expense

Description: Recorded depreciation expense under the straight-line method.

Journal Entry:                                                                                                                      Dr.                                  Cr.

Depreciation Expense                                                                                                        9,000

                    Accumulated Depreciation                                                                                                                       9,000

Transaction 5: Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was equal to the book value.

Journal Entry:                                                                                                                Dr.                                        Cr.

Cash                                                                                                                                   3,000

Accumulated Depreciation                                                                                            16,000

                    Equipment                                                                                                                                                 19,000

Transaction 6: Gain on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.

Journal Entry:                                                                                                                    Dr.                                       Cr.

Cash                                                                                                                                   5,000

Accumulated Depreciation                                                                                          16,000

                    Gain                                                                                                                                                              2,000

                    Equipment                                                                                                                                                 19,000

Transaction 7: Loss on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.

Journal Entry:                                                                                                                    Dr.                                       Cr.

Cash                                                                                                                                      2,500

Loss                                                                                                                                         500

Accumulated Depreciation                                                                                           13,000

                    Equipment                                                                                                                                                16,000

Transaction 8: Note Given to Borrow from Bank

Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.

Journal Entry:                                                                                                                    Dr.                                        Cr.

Cash                                                                                                                                   2,000

                    Notes Payable                                                                                                                                               2,000

Transaction 9: Payment of Note

Description: Paid the principal and interest on the note in Transaction 8.

Journal Entry:                                                                                                                    Dr.                                          Cr.

Notes Payable                                                                                                                 2,000

Interest Expense                                                                                                                 40

                    Cash                                                                                                                                                               2,040

Transaction 10: Bond Issue

Description: Issued a $100,000 Par Value Bond at a Discount

Journal Entry:                                                                                                                     Dr.                                        Cr.

Cash                                                                                                                                  96,454

                    Bonds Payable                                                                                                                                                96,454

Transaction 11: Effective Interest Amortization

Description: Recorded bond interest expense under the effective interest method.

Journal Entry:                                                                                                                       Dr.                                       Cr.

Bond Interest Expense                                                                                                   4,823

                    Bonds Payable                                                                                                                                                  823

                    Cash                                                                                                                                                                   4,000

Transaction 12: Issuing Par Value Stock at a Premium

Description: Issued common stock and received cash of $50,000 in excess of par value.

Journal Entry:                                                                                                                        Dr.                          Cr.

Cash                                                                                                                                  350,000

                    Common Stock , $10 Par Value                                                                                                 300,000

                    Paid-in Capital in Excess of Par Value, Common Stock                                                       50,000

Transaction 13: Dividend

Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.

Journal Entry:                                                                                                                         Dr.                             Cr.

Dividends                                                                                                                              3,800

            Cash                                                                                                                                                                 3,800

Explanation / Answer

Solution:

Ending gross value of Property plant and equipment = Opening balance - Cost of plant sold

= $900,000 - ($19,000 + $19,000 + $16,000) = $846,000

Ending value of Accumulated depreciation = beginning accumulated depreciation + Depreciation Expense for the period - Accumulated depreciation on equipment sold

= $100,000 + $9,000 - ($16,000 + $16,000 + $13,000) = $64,000

Ending net value of Property, Plant and Equipment = Gross value - Accumulated depreciation

= $846,000 - $64,000 = $782,000

hence option D is correct.

Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
Chat Now And Get Quote