Avatar Company Uses the Indirect Method to Prepare Its Statement

Essay

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet:
$$\begin{array} { | l | r | r | r | } \hline & { \mathbf { 2 0 1 4 } } & { \mathbf { 2 0 1 3 } } & { \text { Increase/decrease } } \\\hline \text { Cash } & \$ 21,000 & \$ 18,000 & \$ 3,000 \\\hline \text { Accounts receivable } & 31,000 & 35,000 & ( 4,000) \\\hline \text { Inventory } & 53,000 & 25,000 & 28,000 \\\hline \text { PP\&E, net } & 120,000 & 90,000 & 30,000 \\\hline \text { Total assets } & \$ 225,000 & \$ 168,000 & \$ 57,000 \\\hline\end{array}$$
Additional information provided:
• Equipment costing $52,000 was purchased for cash.
• Equipment with a net asset value of $10,000 was sold for $14,000.
• Depreciation expense of $12,000 was recorded during the year.
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Please use the following T-account format to analyze the transactions affecting net Property, plant & equipment:
Property, plant & equipment, net
$$\begin{array} { | l | l | } \hline \quad \quad \quad90,000 & \quad \quad \quad \quad \\\hline & \\\hline & \\\hline & \\\hline & \\\hline\end{array}$$