UK Business Cash Flow...multiple choice

[accounting2014]

Use the information below to answer the following question. What was the amount of fixed assets purchased in year 2?

End of Year 1 End of Year 2
Cash $39,000 $35,000
Net Fixed Assets 840,000 960,000
Depreciation Expense 77,000 79,000


a. $120,000
b. $195,000
c. $197,000
d. $199,000

 

[kirby]

Ok, show what answer you arrived at and the logic behind it and I'm sure someone will respond that.

 

[accounting2014]

I don't know the answer. I was hoping somebody would be able to answer it for me.

 

[bklynboy]

Go with D. Change in net asset is 120,000. However you need to add back depreciation expense in current year of 79,000 since this reduced the gross amount paid for fixed assets in the second year.

 

[accounting2014]

Thank you very much.


D is the correct answer...You were right on