D excess oquipment at a koss The tolono uring the penod Sanchez Company sold som

Question

D excess oquipment at a koss The tolono uring the penod Sanchez Company sold some nformation was collected from the company's accounting records From the Income Statement $ 840 2,800 Depreciation From the Balance Sheet Ending equpment Ending accumulated depreciation 19,200 12,000 1,970 1,870 No new equipment was bought during the period Required: 1. F or the equipment that was sold, determine its oniginal cost, ts 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) Cost of equipment sold Accumulated depreciation on sold equipment Cash received from sale 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.)

Explanation / Answer

Accumulated Depreciation Account

Equipment (bal fig.)

Bal c/f

940

1,870

Bal B/f

P/L a/c

1,970

840

Equipment Account

Bal b/f

19,200

Accumulated depreciation

Loss on sale

Cash (Bal fig.)

Bal c/f

940

2,800

3,460

12,000

1.

2. The loss on sale of equipment has effected the net income Sanchez company. In cash flow statement this non-cash item is to be added back to find out cash profit from operations.

The loss of $ 2,800 would be added in the computation of net cash flows from Operating activites.

3. The cash realised from the sale of equipment sould be added to compute the Net Cash Flows from Investing Activities.

The cash realised of $ 3,460 would be added.

Particulars Amount $ Particulars Amount $

Equipment (bal fig.)

Bal c/f

940

1,870

Bal B/f

P/L a/c

1,970

840

2,810 2,810

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.