Question

Bowyer Driving School’s 2014 balance sheet showed net fixed assets of $3 million, and the 2015 balance sheet showed net fixed assets of $3.7 million. The company’s 2015 income statement showed a depreciation expense of $200,000. What was net capital spending for 2015? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Answer 1

Answer: $900,000

Step-by-step explanation:

Net fixed assets(2014) = $3 million

Net fixed assets(2015) = $3.7 million

Depreciation expense = $200,000

Net capital spending for 2015 = closing balance of 2015 - opening balance of assets + depreciation for the year

= $3,700,000 - $3,000,000 + $200,000

= $900,000

Therefore, the net capital spending for the year 2015 is $900,000.