The following three accounts appear in the general ledger of Pronghorn Corp duri
ID: 2590084 • Letter: T
Question
The following three accounts appear in the general ledger of Pronghorn Corp during 2017.
Equipment
Date
Debit
Credit
Balance
Accumulated Depreciation—Equipment
Date
Debit
Credit
Balance
Retained Earnings
Date
Debit
Credit
Balance
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $19,928. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $132,023.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Adjustments to reconcile net income to
Equipment
Date
Debit
Credit
Balance
Jan. 1 Balance 398,560 July 31 Purchase of equipment 174,370 572,930 Sept. 2 Cost of equipment constructed 132,023 704,953 Nov. 10 Cost of equipment sold 122,059 582,894Accumulated Depreciation—Equipment
Date
Debit
Credit
Balance
Jan. 1 Balance 176,861 Nov. 10 Accumulated depreciation on equipment sold 39,856 137,005 Dec. 31 Depreciation for year 69,748 206,753Retained Earnings
Date
Debit
Credit
Balance
Jan. 1 Balance 261,555 Aug. 23 Dividends (cash) 34,874 226,681 Dec. 31 Net income 179,352 406,033Explanation / Answer
partial statement of cash flow Cash flow from operating activities net income 406,033 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 69,748 loss on disposal of plant assets 19,928 89,676 net cash provided by operating activities 495,709 cash flows from investing activities Sale of plant assets 62,275 contruction of Equipment -174,370 purchase of Equipment -132,023 Net cash used by investing activities -244,118 cash flows from financing activity payment of cash dividends -34,874
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