Assume the following income statement and balance sheet information:
|
2017 Dr. (Cr.) |
2016 Dr. (Cr.) |
|
|
Cash |
$350 |
$650 |
|
Machinery |
500 |
200 |
|
Accumulated depreciation – machinery |
(250) |
(150) |
|
Retained earnings |
(600) |
(700) |
No machinery was disposed during the year. All machinery purchases were paid in cash.
Required:
- Prepare a journal entry to record the depreciation expense for the year. Determine the cash effect.
- Prepare a journal entry to account for the change in the Machinery balance sheet account. What is the cash effect of this entry?
- Prepare a statement of cash flows for the year ended December 31, 2017.
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