he plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020: Plant Asset Accumulated Depreciation Land $510,000 - Land Improvements 260,000 61,000 Building 2,300,000 366,000 Equipment 1,190,000 421,000 Automobiles 230,000 128,000 Transactions during 2021 were as follows: On January 2, 2021, equipment were purchased at a total invoice cost of $340,000, which included a $7,100 charge for freight. Installation costs of $43,000 were incurred. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $35,000. The fair value of the building on the day of the donation was $22,500. On May 1, 2021, expenditures of $66,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn’t provide future benefits beyond those originally anticipated. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $38 per share. Pell paid legal fees and title insurance totaling $39,000. Shortly after acquisition, the building was razed at a cost of $51,000 in anticipation of new building construction in 2022. On December 31, 2021, Pell purchased a small storage building by giving $16,850 cash and an old automobile purchased for $26,000 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $15,100. The fair value of the old automobile was $5,350. Prepare a schedule analyzing the changes in each of the plant assets during 2021.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
he plant asset and
| Plant Asset | Accumulated Depreciation | |
| Land | $510,000 | - |
| Land Improvements | 260,000 | 61,000 |
| Building | 2,300,000 | 366,000 |
| Equipment | 1,190,000 | 421,000 |
| Automobiles | 230,000 | 128,000 |
Transactions during 2021 were as follows:
- On January 2, 2021, equipment were purchased at a total invoice cost of $340,000, which included a $7,100 charge for freight. Installation costs of $43,000 were incurred.
- On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $35,000. The fair value of the building on the day of the donation was $22,500.
- On May 1, 2021, expenditures of $66,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn’t provide future benefits beyond those originally anticipated.
- On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $38 per share. Pell paid legal fees and title insurance totaling $39,000. Shortly after acquisition, the building was razed at a cost of $51,000 in anticipation of new building construction in 2022.
- On December 31, 2021, Pell purchased a small storage building by giving $16,850 cash and an old automobile purchased for $26,000 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $15,100. The fair value of the old automobile was $5,350.
Prepare a schedule analyzing the changes in each of the plant assets during 2021.
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