$3$

Using Excel to Determine the Cash Flow Effects of Equipment

Disposals

$5$

PROBLEM

The T accounts for equipment and accumulated depreciation for Thompson Ltd$.$ are shown here.

$\backslash$table$[[$Equipment$],[$Jan$.1,80,000,,],[$Acquisition$,40,000,,],[,,$Disposals,$20,000],[$Dec$.31,100,000,,]]$

In addition, Thompson's statement of income reported the following amount.

$\backslash$table$[[$Accumulated Depreciation$-$Equipment$],[,,$Jan. $1,44,500],[,$Depreciation,$20,000,],[$Disposals$,5,500,,],[,$Dec. $31,59,000,]]$

Student Work Area

Required: Provide input into cells shaded in yellow in this template. Use mathematical formulas with cell references to the Problem area and work area as indicated.

a$.$ What amount was reported on the statement of cash flows as "cash provided by disposal of equipment"? Hint: Prepare the journal entry to determine the effects of the sale.

Cash provided by disposal of equipment $$18$

b$.$ In what section of the statement of cash flows would the effects of this disposal transaction be reported?

Loss on disposal of equipment

$$1,500$

Reported as an operating activity

Reported as an investing activity

Reported as a financing activity

PLEASE WRITE ALL JOURNAL ENTRIES