Question

QS 16-13 Computing cash from asset sales LO P3

CRUZ, INC. Comparative Balance Sheets December 31, 2019
		2019				2018
Assets
Cash	$	64,300			$	16,100
Accounts receivable, net		27,600				34,100
Inventory		57,700				64,000
Prepaid expenses		3,600				2,900
Total current assets		153,200				117,100
Furniture		72,600				82,200
Accum. depreciation—Furniture		(11,200	)			(6,200	)
Total assets	$	214,600			$	193,100
Liabilities and Equity
Accounts payable	$	10,100			$	14,200
Wages payable		6,000				3,300
Income taxes payable		1,000				1,800
Total current liabilities		17,100				19,300
Notes payable (long-term)		20,600				47,700
Total liabilities		37,700				67,000
Equity
Common stock, $5 par value		154,700				123,700
Retained earnings		22,200				2,400
Total liabilities and equity	$	214,600			$	193,100

   

CRUZ, INC. Income Statement For Year Ended December 31, 2019
Sales				$	330,500
Cost of goods sold					212,700
Gross profit					117,800
Operating expenses
Depreciation expense	$	25,400
Other expenses		60,300			85,700
Income before taxes					32,100
Income taxes expense					11,700
Net income				$	20,400

Furniture costing $71,500 is sold at its book value in 2019. Acquisitions of furniture total $61,900 cash, on which no depreciation is necessary because it is acquired at year-end. Complete the general ledger accounts to calculate cash received from the sale of furniture.

Complete the general ledger accounts to calculate cash received from the sale of furniture.

Answer 1

Furniture Account were as follows:

Furniture Account
Particulars	Debit	Credit
Opening Balance	82,200
Purchase	61,900
Sale		71,500
Ending Balance	72,600

Calculation of accumulated depreciation on sold furniture were as follows:

Opening Balance	6,200
Add : Depreciation for the year	25,400
Less : Ending Balance	(11,200)
Accumulated Depreciation balance on sold furniture	20,400

Accumlated Depreciation Ledger account were as follows:

Accumulated Depreciation Account
Particulars	Debit	Credit
Opening Balance		6,200
Depreciation During the Year		25,400
Sale of furniture	20,400
Ending Balance		11,200

Then Cash Received from selling of furniture =

Cost of Furniture = 71500

Less : Accumulated Depreciation = 20400

The cash received and book value will be 51100