Pan-Atlantic Shipping Co. has accumulated the following information:
Property, Plant & Equipment Accounts at 01/01/2019
Land $10,000
Buildings and equipment $48,000
Accumulated depreciation ($15,000)
Net $33,000
Total $43,000
Investing Activities from SCF for 2019
Sale of building (historical cost = $10,000) $8,000
Purchase of land ?
Purchase of building and equipment ($30,000)
Net cash used by investing activities ($40,000)
Selected Accounts from the 2019 Income Statement
Depreciation expense $11,000
Gain on sale on building $4,000
Cost of goods sold $107,200
Required:
1. How much was paid for the land acquired in 2019?
2. How was the gain on sale of the building determined? Show calculations.
3. How is the gain on the sale of the building treated on the Statement of Cash Flows?
4. Determine the adjusted balances for all property, plant, and equipment accounts at December 31, 2019. Suggestion: Use T Accounts.
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