![]() ![]() How does the cost of equipment grow from $130,000 to $967,000? If no other transaction is mentioned, the most reasonable explanation is that equipment was acquired at a cost of $837,000 ($967,000 less $130,000). However, at the end of the period, the balance reported for this asset is actually $967,000. This transaction should have dropped the ledger account total to $130,000 ($730,000 less $600,000). The sale of equipment costing $600,000 was just discussed. ![]() The equipment account began the year with a $730,000 balance. Once again, the accountant must puzzle out the amount of cash involved in the transaction. According to the information provided, another asset was acquired this year but its cost is unavailable. The $594,000 in cash collected is shown but as an inflow from an investing activity.
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