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    Balance Sheets Accumulated Depreciation

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    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)

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    Solution Summary

    Accumulated depreciation in balance sheets are examined.