Below are 3 journal entries relating to Plant Assets.

(1) dr. Plant Assets 9,000 (2) dr. Cash 1,000

cr. Cash 9,000 dr. A/Depreciation 3,000

Record the purchase of assets with cash cr. Plant Asset 3,600

cr. Gain on sale 400

(3) dr. Depreciation Expense 2,400 Record sale of Plant Asset for Cash

cr. Accum. Depreciation 2,400

Record depreciation expense

Use these journal entries to post to the T accounts, Plant Assets and Accumulated Depreciation.

			Traditional account approach
				Plant Assets				A/Dep
				110,000					52,000
				115,400					51,400

What is beginning Net Plant Assets? (Plant Assets minus Accumulated Depreciation)

What is ending Net Plant Assets? (Plant Assets minus Accumulated Depreciation)

Calculate the Net Book Value of the Plant Assets sold by using the journal entry to record the gain or loss on the sale. JE (2) from above.

Credit to Plant Assets _________________

subtract Debit to Accum. Depreciation _________________

NBV of Plant Assets Sold _________600_____

Now treat the 2 accounts PP&E and Accumulated Depreciation as if they were only 1 account called Net Plant Assets. Post the same journal entries to the single account. The beginning and ending balance of Net Plant Assets should agree to b) and c) from above. Note The labels for each item are on the left but this DOES NOT mean the item will be on the left side (debit) of the T account.

			Simplified account approach
					Net Plant Assets
Beg Bal
Depreciation
NBV Sold
Equip. Purchased

Notice that depreciation expense and gain/loss on sale of plant assets are items that would be reported on the income statement, while the beginning and ending balances are reported on the balance sheet. The cash paid and received for activity to these accounts is reported on the Statement of Cash Flows. Include the appropriate amounts from the JOURNAL ENTRIES to complete the section of the Statement of Cash Flows below. Note These are the amounts that debit or credit the CASH ACCOUNT!! (highlighted)

Investing activity:

Cash paid for purchase of Plant Assets ______________

Cash received from sale of Plant Assets ______________

Net Cash used for Investing Activities $ __(8,000)