Equipment with a cost of $80,000 and accumulated depreciation of $75,000 is sold for $12,000 cash.Required:Part a. Prepare the journal entry to record this transaction.Part b. Explain how this transaction would be reported on the statement of cash flows prepared using the indirect method.
What will be an ideal response?
Part a
| Cash | 12,000 | ? |
| Accumulated Depreciation-Equipment | 75,000 | ? |
| Equipment | ? | 80,000 |
| Gain on Disposal | ? | 7,000 |
The gain on disposal in the amount of $7,000 would be listed in the operating activities section of the statement of cash flows as an adjustment to reconcile net income to net cash provided by operating activities. It would be subtracted from net income. The proceeds from the sale of $12,000 would be reported as a cash inflow from investing activities in the statement of cash flows.
You might also like to view...
Explain the physiological barrier, language barrier, and psychological barrier of communication. Include examples of each
What will be an ideal response?
The Supreme Court case decision on the case of Brown v. Board of Education was important because it exhibited ________
A) the use of the affirmative action policy B) the scope of flexibility of the law C) the state's supremacy over federal rulings D) the importance of following precedence
All other factors being the same, firms that are more dependent on stock issues for raising financial capital have greater financial risk
Indicate whether the statement is true or false.
If, at an optimal solution, the Cj - Zj value for a real variable that is not in the solution mix has a value of one, there are multiple optimal solutions
Indicate whether the statement is true or false