The balance sheet data of Sweet Company at the end of 2020 and 2019 are shown below. 2020 2019 Cash $30,100 $35,100 Accounts receivable (net) 55,000 44,900 Inventory 64,600 45,100 Prepaid expenses 15,000 24,700 Equipment 90,200 74,500 Accumulated depreciation—equipment (18,040 ) (8,000 ) Land 70,200 39,800 $307,060 $256,100 Accounts payable $64,600 $52,500
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
28.
The
|
2020
|
2019
|
|||||
| Cash |
$30,100
|
$35,100
|
||||
|
55,000
|
44,900
|
|||||
| Inventory |
64,600
|
45,100
|
||||
| Prepaid expenses |
15,000
|
24,700
|
||||
| Equipment |
90,200
|
74,500
|
||||
|
(18,040
|
)
|
(8,000
|
)
|
|||
| Land |
70,200
|
39,800
|
||||
|
$307,060
|
$256,100
|
|||||
| Accounts payable |
$64,600
|
$52,500
|
||||
| Accrued expenses |
14,800
|
17,900
|
||||
| Notes payable—bank, long-term |
–0–
|
22,900
|
||||
| Bonds payable |
30,300
|
–0–
|
||||
| Common stock, $10 par |
190,400
|
160,000
|
||||
|
6,960
|
2,800
|
|||||
|
$307,060
|
$256,100
|
Land was acquired for $30,400 in exchange for common stock, par $30,400, during the year; all equipment purchased was for cash. Equipment costing $13,200 was sold for $3,100; book value of the equipment was $6,100. Cash dividends of $10,100 were declared and paid during the year.
Compute net cash provided (used) by: (Show amounts that decrease
| (a) | Net Cash by operating activities. |
$
|
||
| (b) | Net Cash by investing activities. |
$
|
||
| (c) | Net Cash by financing activities. |
$
|
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