The following information relates to Equipment and related accounts of De Soto Corporation:

-Refer to Exhibit 13-3. Assuming that all of De Soto's equipment purchases are for cash, how much cash was used to purchase equipment during the year?

Question

The following information relates to Equipment and related accounts of De Soto Corporation:
 
-Refer to Exhibit 13-3. Assuming that all of De Soto's equipment purchases are for cash, how much cash was used to purchase equipment during the year?

Quizplus · Accepted Answer

Cash payments for equipment during the year can be calculated by adding the increase in Equipment account ($70,000 - $20,000 = $50,000) to Depreciation Expense ($28,000), resulting in total equipment purchased during the year of $78,000. Since it is assumed that all equipment purchases were for cash, the amount of cash used to purchase equipment during the year is also $78,000. Therefore, the correct answer is option C, $70,000.

The Following Information Relates to Equipment and Related Accounts of De