The following three accounts appear in the general ledger of Pronghorn Corp. during 2025. Date Jan. 1 July 31 Sept. 2 Nov. 10 Date Jan. 1 Nov. 10 Dec. 31 Date Jan. 1 Aug. 23 Balance Purchase of equipment Purchase of equipment Cost of equipment sold Balance Balance Equipment Accumulated depreciation on equipment sold Depreciation for year Dividends (cash) Debit Accumulated Depreciation-Equipment Retained Earnings 122,500 92,750 Debit 28,000 Debit 24,500 Credit 85,750 Credit 49,000 Credit Balance 280,000 402,500 495,250 409,500 Balance 124,250 96,250 145,250 Balance 183,750 159,250
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.
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![Aug. 23
Dec. 31
Dividends (cash)
Net income
Cash Flows from Operating Activities
Net Income
Adjustments to reconcile net income to
Net Cash Provided by Operating Activities ::
Depreciation Expense
From the postings in the accounts, indicate how the information is reported by preparing a partial statement of cash flows using the
indirect method. The loss on disposal of plant assets was $14,000. (Show amounts that decrease cash flow with either a-sign eg
-15,000 or in parenthesis e.g. (15,000).)
PRONGHORN CORP.
Statement of Cash Flows (Partial) - Indirect Method
For the Year Ended December 31, 2025 :
Cash Flows from Investing Activities
Sale of Equipment
24,500
Purchase of Equipment
126,000
:
100,700
159,250
285,250
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![The following three accounts appear in the general ledger of Pronghorn Corp. during 2025.
Date
Jan. 1
July 31
Sept. 2
Nov. 10
Date
Jan. 1
Nov. 10
Dec. 31
Date
Jan. 1
Aug. 23
Balance
Purchase of equipment
Purchase of equipment
Cost of equipment sold
Balance
Balance
Equipment
Accumulated depreciation on equipment sold
Depreciation for year
Dividends (cash)
Debit
Accumulated Depreciation-Equipment
Retained Earnings
122,500
92,750
Debit
28,000
Debit
24,500
Credit
85,750
Credit
49,000
Credit
Balance
280,000
402,500
495,250
409,500
Balance
124,250
96,250
145,250
Balance
183,750
159,250](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fddad5d86-091d-4493-90be-ef5753132bfd%2Fbf5be462-5b93-49a6-bd0c-c21c98a0a84e%2F5ptgj3b_processed.jpeg&w=3840&q=75)
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