Earnhardt Driving School\'s 2008 balance sheet showed net fixed assets of $4.1 m

Question

Earnhardt Driving School's 2008 balance sheet showed net fixed assets of $4.1 million, and the 2009 balance sheet showed net fixed assets of $5.6 million. The company's 2009 income statement showed a depreciation expense of $965,000. What was net capital spending for 2009?

Earnhardt Driving School's 2008 balance sheet showed net fixed assets of $4.1 million, and the 2009 balance sheet showed net fixed assets of $5.6 million. The company's 2009 income statement showed a depreciation expense of $965,000. What was net capital spending for 2009?

Explanation / Answer

Ending net fixed assets=Beginning net fixed assets+Net capital spending-Depreciation

5,600,000=4,100,000+Net capital spending-965000

Hence Net capital spending=(5,600,000+965000-4,100,000)

which is equal to

=$2,465,000.

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