Following are balance sheet data for Quality Merchandise, Inc.: December 31 2011
ID: 2472521 • Letter: F
Question
Following are balance sheet data for Quality Merchandise, Inc.:
December 31 2011 2010
Cash $ 47,000 $ 26,000
Accounts receivable, net 141,000 134,000
Merchandise inventory 83,000 102,000
Prepaid expenses 9,000 11,000
Plant assets (net of accumulated depreciation) 235,000 230,000
Accounts payable 122,000 127,000
Accrued liabilities payable 40,000 41,000
Capital stock 300,000 300,000
Retained earnings 53,000 35,000
Assume that the depreciation recorded in 2011 was USD 15,000. Compute the cash spent to purchase plant assets, assuming no assets were sold or scrapped in 2011.
Explanation / Answer
Answer:
We need to prepare Plant Asset Account in order to find out cash spent to purchase plant asset.
Plant Asset Account
Dr.
Cr.
Particulars
Amount
Particulars
Amount
To beginning balance
$230,000
By Depreciation
$15,000
To Cash (Purchase)
$20,000
By Ending Balance
$235,000
$250,000
$250,000
Hence, the Cash spent to purchase plant asset is $20,000
Plant Asset Account
Dr.
Cr.
Particulars
Amount
Particulars
Amount
To beginning balance
$230,000
By Depreciation
$15,000
To Cash (Purchase)
$20,000
By Ending Balance
$235,000
$250,000
$250,000