Question
1) In 2020, Gamma sold used equipment for $13. The equipment had an original cost of $80 and accumulated depreciation as of the date of
1) In 2020, Gamma sold used equipment for $13. The equipment had an original cost of $80 and accumulated depreciation as of the date of sale was $60. It also purchased held-to-maturity securities for $9. Net income for the year was $66 after deducting $12 in depreciation expense. There were no other transactions conducted during the period. How much are the 2020 operating cash flows for Gamma? What are the investing cash flows for Gamma?
2)Beta purchased an insurance policy on 1/1/15 and paid a five-year premium for $200. The full purchase price was incorrectly recorded immediately as Insurance Expense. The error was discovered on 1/1/18. Prepare the journal entry that would correct assets and retained earnings as of 1/1/18.
3) In March, 2018, Gamma sold Available-for-Sale securities for $75. It had originally purchased these securities for $55. By mistake, Gamma debited cash and credited investments for $75 at the time of sale. The error was caught the following day (before books closed). Prepare the journal entry that would correct this error without having to reverse the original journal entry.
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