Following are selected balance sheet accounts of Marin Bros. Corp. at December 3
ID: 2400100 • Letter: F
Question
Following are selected balance sheet accounts of Marin Bros. Corp. at December 31, 2017 and 2016, and the increases or decreases in each account from 2016 to 2017 Also presented is selected income statement information for the year ended December 31, 2017, and additional information Selected balance sheet accou nts Increase (Decrease) Assets Accounts receivable Property, plant, and equipment Accumulated depreciation-plant assets 2017 $34,000 274,800 2016 $24,100 244,700 $9,900 30,100 (11,000) (179,200) (168,200) Increase $2,900 3,000 3,100 6,000 13,500 2017 2016 Liabilities and stockholders' equity Bonds payable Dividends payable Common stock, $1 par Additional paid-in capital Retained earnings $49,200 8,000 21,900 9,000 104,500 $46,300 5,000 18,800 3,000 91,000 Selected income statement information for the year ended December 31, 2017: Sales revenue Depreciation Gain on sale of equipment Net income $154,700 37,900 14,400 30,900Explanation / Answer
Solution:
(a)Payments for purchase of property, plant, and equipment.
Payment made in cash for purchase of property, plant and equipment is $ 55,300.
It will be shown as cash outflow under Investing Activities.
Explanation:
Property, plant, and equipment Account
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Beginning Balance
244,700
Cash sale*
32,900
Gain on sale of equipment
14,400
Depreciation on equipment sold
26,900
Bonds payable (issued)
20,200
Cash purchase (Balancing figure)
55,300
Ending Balance
274,800
Total
334,600
Total
334,600
*Cash sale= Cost of equipment- Accumulate depreciation + Gain on sale
= $ 45,400 - $ 26,900 + $ 14,400
= $ 32,900
Accumulated depreciation –plant assets Account
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Depreciation on equipment sold (Balancing Figure)
26,900
Beginning Balance
168,200
Ending Balance
179,200
Depreciation (Current Year)
37,900
Total
206,100
Total
206,100
(b) Proceeds from sale of equipment
Cash proceed from sale of equipment
= Cost of equipment- Accumulate depreciation + Gain on sale
= $ 45,400 - $ 26,900 + $ 14,400
= $ 32,900 (Answer)
It will be shown as cash inflow under Investing Activities.
(c)Cash dividends paid
Cash dividend paid is $ 14,400.
It will be shown as cash outflow under Financing Activities.
Retained earnings Account
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Dividend paid (Balancing Figure)
14,400
Beginning Balance
91,000
Increase in dividend payable
3,000
Ending Balance
104,500
Net Income (Current Year)
30,900
Total
121,900
Total
121,900
(d)Redemption of bonds payable
Redemption of bonds payable is $ 17,300.
It will be shown as cash outflow under Financing Activities.
Explanation:
Bonds Payable Account
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Cash –Redemption of bonds (Balancing Figure)
17,300
Beginning Balance
46,300
Ending Balance
49,200
Bonds issued in exchange of property, plant and equipment
20,200
Total
66,500
Total
66,500
Particulars
Debit Amount ($)
Particulars
Credit Amount ($)
Beginning Balance
244,700
Cash sale*
32,900
Gain on sale of equipment
14,400
Depreciation on equipment sold
26,900
Bonds payable (issued)
20,200
Cash purchase (Balancing figure)
55,300
Ending Balance
274,800
Total
334,600
Total
334,600