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Balance Sheets Accumulated Depreciation

Maverick Corp.
Balance sheet at December 31
2008 2007 2008 2007
Cash $64,000 $58,000 Accounts payable $44,000 $41,000
Accounts receivable $46,000 $48,000 Wages payable $19,000 $13,000
Inventory $56,000 $59,000 Taxes payable $15,000 $10,000

Property, Plant & Equipment $265,000 $183,000 Long-term debt $150,000 $120,000
Accumulated Depreciation ($51,000) ($40,000) Contributed capital $80,000 $80,000
Retained earnings $72,000 $44,000
$380,000 $308,000 $380,000 $308,000
Maverick Corp.
Income Statement for
Year Ending December 31, 2008
Sales Revenue $400,000
Cost of Goods Sold ($240,000)
Gross Profit $160,000
SG&A Expense ($80,000)
Depreciation Expense ($30,000)
Gain on Disposal of PP&E $10,000
Tax Expense ($20,000)
Net Income $40,000
a. The company sold PP&E that initially cost $40,000 during the year. What was the cost of PPP&E acquired during the year? (5 points)
b. The company recorded depreciation expense of $30,000. What was the accumulated depreciation for the PP&E disposed of during the year? (5 points)
c. What were the proceeds from disposal of PP&E sold during the year? (5 points)
d. How much did the company pay in dividends during the year? (5 points)
e. Prepare the Operating Activities section of the Statement of Cash Flows using the indirect method. (10 points)
f. Prepare the Investing Activities section of the Statement of Cash Flows. (5 points)
g. Prepare the Financing Activities section of the Statement of Cash Flows. Assume that the change in long-term debt was due to new borrowing and that there were no changes in the contributed capital during the period. (5 points)


Solution Summary

Accumulated depreciation in balance sheets are examined.