The Capitals Company has provided you the following information pertaining to th
ID: 2578021 • Letter: T
Question
The Capitals Company has provided you the following information pertaining to the year ending December 31, 2018: Equipment Accumulated depreciation January 1, 2018 $575,000 $165,000 December 31, 2018 $729,000 $120,500 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 1. Determine the cash paid for equipment purchases during 2018. 2. Determine the depreciation expense for 2018.Explanation / Answer
1) Equipment opening balance 575,000 Add :Equipment for CS 25,000 less:Scrapped -57,500 less:sold (67,000+39000) -106000 total 436,500 closing balance 729,000 less:Balance total calculated above -436,500 Equipment purchased for cash 292,500 answer 2) Accumulated depreciation opening balance 165,000 less:Dep on scrapped (57500-5000) -52,500 less:Dep on equipment sold -67,000 balance 45,500 Depreciation expense closing accumulated depreciation 120,500 less:Balance calculated above -45500 Depreciation expense 75,000 answer