Computing the cash effect of acquiring assets McKnight Exercise Equipment, Inc., reported the following financial statements for 2012:
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MCKNIGHT EXERCISE EQUIPMENT, INC. Income Statement Year Ended December 31, 2012 |
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Sales revenue |
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$ 714,000 |
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Cost of goods sold |
$ 347,000 |
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Depreciation expense |
52,000 |
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Other expenses |
205,000 |
604,000 |
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Total expenses |
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Net income |
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$ 110,000 |
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MCKNIGHT EXERCISE EQUIPMENT, INC. |
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Assets |
2012 |
2011 |
Liabilities |
2012 |
2011 |
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Current: |
Current: |
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Cash |
$ 19,000 |
$ 18,000 |
Accounts payable |
$ 73,000 |
$ 72,000 |
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Accounts receivable |
54,000 |
49,000 |
Salary payable |
2,000 |
5,000 |
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Inventory |
81,000 |
89,000 |
Long term notes payable |
59,000 |
66,000 |
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Long term investments |
95,000 |
77,000 |
Stockholders’ Equity |
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|
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Plant assets, net |
221,000 |
183,000 |
Common stock |
47,000 |
34,000 |
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Retained earnings |
289,000 |
239,000 |
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Total liabilities and |
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Total assets |
$470,000 |
$416,000 |
stockholders’ equity |
$470,000 |
$416,000 |
Requirement
1. Compute the amount of McKnight Exercise’s acquisition of plant assets. McKnight Exercise sold no plant assets.