Q14-7SE - Horngren'S Financial And Managerial Accounting

Question

Question: Computing investing and financing cash flows Preston Media Corporation had the following income statement and balance sheet for 2018:

                                                   PRESTON MEDIA CORPORATION

                                                          Income Statement

                                            Year Ended December 31, 2018

Sales Revenue \(80,000

Depreciation Expense––Plant Assets  \)11,000

Other Expenses \(50,000

 Net Income \)19,000

 

Requirements 

1. Compute the acquisition of plant assets for Preston Media Corporation during 2018. The business sold no plant assets during the year. Assume the company paid cash for the acquisition of plant assets. 

2. Compute the payment of a long-term note payable. During the year, the business issued a $4,400 note payable.

 

Step-by-Step Solution

Answer

Answer

 

Requirement (1): cash paid to purchase new plant is $21,000.

Requirement (2): Payment of a long-term note payable is $7,400.

Step 1: (Requirement 1.) Computation of acquisition of plant assets for Preston Media Corporation during 2018

Particulars	Amount ($)
Plant assets (31st December, 2018)	105,350
Plant assets (31st December, 2017)	(84,350)
Cash paid to purchase new plant	21,000

Step2: (Requirement 2.) Computation of the payment of a long-term note payable

Particulars	Amount($)	Particulars	Amount($)
Payment	7,400	Opening balance (31/12/2017)	12,000
Closing balance (31/12/2018)	9,000	New issuance	4,400
Total	16,400	Total	16,400