Gross profit $120,000 Operating expenses (includes depreciation expense of $17,0
ID: 2591563 • Letter: G
Question
Gross profit $120,000
Operating expenses (includes depreciation expense of $17,000) 48,000
Interest expense 5,000
Gain on disposal of equipment 3,000
Income tax expense 19,000
Net earnings $ 51,000
Additional information for fiscal 2016:
1. New equipment was purchased by using the cash proceeds from issuing shares.
2. Slightly used equipment was sold for cash because it was no longer needed.
3. Certain long-term investments were sold for cash at their book value.
4. New bonds were issued for cash at their face value
5. Additional land was purchased for cash. There were no disposals of land.
6. A large cash dividend was declared and paid.
Answers
Disposal of equipment :
Calc. 1: $92,000 + $31,000 - $82,000 = $41,000 cost of equipment sold.
$15,000 + $17,000 - $31,000 = $1,000 accum. depreciation of equipment sold.
$41,000 - $1,000 + $3,000 = $43,000 proceeds from disposal of equipment.
I do not understand this equations , I would like to have a T accounts for these equations for the disposal of equipment
2016 2015 cash 37000 10000 trade accounts receivable 57200 33000 merchandise inventory 42000 85000 investment in shares 5000 20000 land 78000 38000 equipment at cost 82000 92000 less: accumulated depreciation (31000) (15000) total assets 270200 263000 trade accounts payable 40000 72800 accrued operating expenses payable 15200 23200 income taxes payable 17000 10 000 bonds payable 65000 40 0000 common shares 96000 65000 retained earnings 37000 52000 total liabiltiies 270200 263000Explanation / Answer
Solution:-
1. For cost of equipment sold:-
By sold equipment (balance)
(cost of equipmetn sold)
2. For accumulated depreciaiton of equipment sold:-
3. For proceeds from disposal of equipment:-
Please Rate or comment if you have any doubt regarding this solution.
Equipment account To opening balance 92,000By sold equipment (balance)
(cost of equipmetn sold)
41,000 To Cash (96,000 - 65,000) 31,000 By closing balance 82,000 123,000 123,000Related Questions
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