The Capitals Company has provided you the following information pertaining to th
ID: 2577302 • Letter: T
Question
The Capitals Company has provided you the following information pertaining to the year ending December 31, 2018:
Equipment costing $25,000 was acquired in exchange for common stock.
Equipment with an original cost of $57,500 and a book value of $5,000 was scrapped.
Equipment was purchased in exchange for cash.
Equipment with a book value of $39,000 was sold resulting in a $14,000 gain. The accumulated depreciation at the time of the sale was $67,000.
Required:
Determine the cash paid for equipment purchases during 2018.
Determine the depreciation expense for 2018.
January 1, 2018 December 31, 2018 Equipment $ 575,000 $ 729,000 Accumulated depreciation $ 165,000 $ 120,500Explanation / Answer
Equipent opening balance 575,000 Exchange for common stock (25,000) Screpped equipment (5,000) Cost of equipment sale (39,000) Balance 506,000 Equipent Ending Balance 729,000 Cash paid for equipment purchases 223,000 Accumulated depreciation opening balance 165,000 Depreciation for scrap (52,500) Depreciation of equipment sale (67,000) Balance 45,500 Ending Balance 120,500 Depreciation expense 75,000