The differences in Bravo Inc.\'s balance sheet accounts at December 31, year 2 a
ID: 2770230 • Letter: T
Question
The differences in Bravo Inc.'s balance sheet accounts at December 31, year 2 and year 1, are presented below.
Assets Increase (Decrease)
Cash and cash equivalents $120,000
Available-for-sale securities 300,000
Accounts receivable, net 0
Inventory 80,000
Long-term investments (100,000)
Plant assets 700,000
Accumulated depreciation 0
Total $1,100,000
Liabilities and Stockholders' Equity Increase (Decrease)
Accounts payable and accrued liabilities $(5,000)
Dividends payable 160,000
Short-term bank debt 325,000
Long-term debt 110,000
Common stock, $10 par 100,000
Additional paid-in capital 120,000
Retained earnings 290,000
Total $1,100,000
The following additional information relates to year 2: > Net income was $790,000. > Cash dividends of $500,000 were declared. > Building costing $600,000 and having a carrying amount of $350,000 was sold for $350,000. > Equipment costing $110,000 was acquired through issuance of long-term debt. > A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments. > 10,000 shares of common stock were issued for $22 a share
In Bravo's year 2 statement of cash flows, Net cash used in investing activities was
Explanation / Answer
The plant account (Gross) Increased $700,000
$700,000 = $600,000 (Sale of Building ) + $110,000 (Equipment Purchase) + X
There fore additional Purchase of Plant Assets = ($700,000- 110,000 + 600,000) = $1,190,000)
Proceeds from the sale of Securitites $135,000 Proceeds from the sale of Building $350,000 Purchase of other Plant Assets ($1,190,000 Net Cash Used In Investing Activities ($705,000)Related Questions
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