A machine with a cost of $131,000 and accumulated depreciation of $86,000 is sol

Question

A machine with a cost of $131,000 and accumulated depreciation of $86,000 is sold for $50,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

A.) $50,500.

B.) Zero. This is a financing activity.

C.) $45,000.

D.) Zero. This is an operating activity.

E.) $5,500.

A machine with a cost of $131,000 and accumulated depreciation of $86,000 is sold for $50,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

Explanation / Answer

Journal entry for sale of Machine

Hence answer is $50,500 (A)

Since the Machine is sold for cash of $50,500

Gain on sale is reoprted under operating activities .

Cash $50,500 Accumulated depreciation $86,000 To Machine $131,000 To Gain on sale $5,500

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