G Corp. began 2010 with $2,000,000 in its equipment account. During 2010, G sold equipment with a historical cost of $300,000 at a $20,000 gain. At the end of 2010, G Corp. had a $3,300,000 balance in the equipment account. G bought new equipment during the year by signing a $200,000 note payable; the note and interest are due in 2011. In 2010, how much cash did G Corp. pay for equipment purchases?

Question

Quizplus · Accepted Answer

G Corp. started with $2,000,000 and sold equipment worth $300,000, reducing the balance to $1,700,000. The ending balance was $3,300,000, indicating a net increase of $1,600,000. Since $200,000 was financed through a note payable, the cash paid for equipment was $1,600,000 - $200,000 = $1,400,000.

G Corp Began 2010 with $2,000,000 in Its Equipment Account