Question
During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the companys accounting records: From the Income
During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the companys accounting records:
From the Income Statement | ||
Depreciation expense | $ | 930 |
Loss on sale of equipment | 4,000 | |
From the Balance Sheet | ||
Beginning equipment | 20,300 | |
Ending equipment | 11,300 | |
Beginning accumulated depreciation | 1,990 | |
Ending accumulated depreciation | 1,770 | |
No new equipment was bought during the period.
Required:
1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.)
2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities?(Input the amount as positive value.)
3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities? (Input the amount as positive value.)
Cost of equipment sold Accumulated depreciation on sold equipment Cash received from sale The would be The cash would be
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started