net book value of the asset prior to cash effect of the transaction? mpany sold
ID: 2518981 • Letter: N
Question
net book value of the asset prior to cash effect of the transaction? mpany sold equipment for cash. The income statement shows a gain on sale of $920. The sale was $3,510. Which of the following stabenents describes the negative cash flow of $4,430 for financing activities cash flow of $4,430 from investing activities B) positive C) positive cash flow of $2,590 froen investing activities cash flow of $2,590 from investing activities D) negative cash flow of $2,590 for operating activities ) Avatar Company uses the indirect method to tollowing portion of the comparative balance sheet Phepare its statement of cash Bows. Refer to the ? Avatar Company Comparative Balance Sheet December 31.2014 and 2013 Common Stock Retained Eamings Treasury Stock Total equity 2014 113,000 2013 $16,000 $12,000 74,000 121(5,000 $4,000 39,000 $81,000 0,000 Note: 1) There was no retirement of stock during the year. 2) There were no sales of treasury stock during the year Which of the following statements would be true? A) There was a negative cash flow of $4,000 from the issuance of Common Stock B) There was positive cash flow of $16,000 from issuance of Common Stock C) There was zero net cash flow from transactlons involving Common Stock D) There was a positive cash flow of $4,000 from the issuance of Common Stock 16) 16) Taylor Company follows the indirect method to prepare its statement of cash flows Refer to the following portion of the comparative balance sheet Taylor Company Comparative Balance Sheet December 31, 2014 and 2013 2013 Increase/decrease $28,000 65,000 2014 Common Stock Retained Earnings Treasury Stock Total equity $30,000 $2,000 154,000 89,000 8,000) (5,000) $176,000 $86,000 $90,000 Note: Net Income for the year was $89,000. Based on the above information, calculate the dividends declare during the year 202a D) $89,000 C) $24,000 B)$3,000Explanation / Answer
Answer to Question No. 14:
Option B i.e. Positive Cash flow of $4,430 from Investing Activities.
Book Value of Equipment on the date of Sale = $3,510
Gain on Sale of Equipment = $920
Sale Value of Equipment = $3,510 + $920
Sale Value of Equipment = $4,430
A Sale of Equipment will lead to positive cash flow, as cash is generated from Sale of Equipment. Therefore, a positive cash flow of $4,430 (Sale Value) from Investing Activities is generated.
Answer to Question No. 15:
Option D i.e. There was positive Cash flow of $4,000 from the issuance of Common Stock.
The Increase in Common Stock is $4,000 ($16,000 - $12,000) which is due to issuance of Common Stock. The issuance of Common Stock generated a positive cash flow or Cash Inflow.
The Change in Treasury Stock due to purchase of Treasury Stock will be recorded separately as Purchase of Treasury stock of $3,000 in Financing Activities.
Therefore, there is positive cash flow of $4,000 from the issuance of Common Stock.
Answer to Question No. 16:
Option C i.e. $24,000.
Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividend
$154,000 = $89,000 + $89,000 – Dividend
Dividend = $24,000
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