Mays Company sold a machine for $10,000 cash. The machine originally cost $65,000 and the company...
|
Mays Company sold a machine for $10,000 cash. The machine originally cost $65,000 and the company had recognized $53,000 in depreciation over the life of the machine. What is the effect of this sale on Mays Company's income statement and its statement of cash flows? |
Multiple Choice
-
$2,000 loss on the income statement; $10,000 cash outflow from operating activities
-
$2,000 loss on the income statement; $10,000 cash inflow from investing activities
-
$55,000 loss on the income statement; $10,000 cash inflow from operating activities
-
$55,000 loss on the income statement; $10,000 cash inflow from investing activities
Homework Answers
Effect on the income statement:
Cost of the asset = $65,000
Calculate the book value of the asset = Cos of the asset - Accumulated Depreciation
= $65,000 - $53,000
= $12,000
Calculate the Profit/Loss on sale of asset = Sale value of the asset - Book value of the asset
= $10,000 - $12,000
= $2,000 (Loss)
Note: When book value of the asset is more than the sale value of the asset then it is loss and when book value of the asset is less than the sale value the it is profit.
In this case, book value of the asset is more than the sale value of the asset, hence, there is a loss of $2,000 on sale of asset.
Effect on Cash flows statements:
Cash flow statement shows the cash inflows (cash received) and cash outflows (cash paid) and sale of assets and purchase of assets comes under Investing activities.
In this case, the cash flow of $10,000 is inflows as the company has received on the sale of asset and it covers under Investing activities.
Therefore, the correct answer is "$2,000 loss on the income statement; $10,000 cash inflows from investing activities.
Add Answer to:
Mays Company sold a machine for $10,000 cash. The machine
originally cost $65,000 and the company...
If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of accumulated depreciation,...
If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of accumulated depreciation, how is this reported in the statement of cash flows? Multiple Choice $8,000 cash inflow in financing activities, and $3,000 loss as an addition to net income under operating activities $8,000 cash inflow in financing activities, $3,000 gain as an addition from net income under operating activities $8,000 inflow as an investing activity, and $3,000 gain as a subtraction from net income under operating...
1. Milner Co. sold a machine that cost $79,000 and had a book value of $45,000...
1. Milner Co. sold a machine that cost $79,000 and had a book value of $45,000 for fro m Milner's comparative balance sheets are: 12/31/18 12/31/17 $800,000 $670,000 Machinery Accumulated depreciation 190,000 136,000 What four items should be shown on a statement of cash flows (indirect meth od) from this information? Show your calculations. (4 points) Investing activities - cash inflow from sale of Prop. Plant and Equip. Investing activities - cash outflow from purchase of Prop. Plant and Equip....
1. Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new...
1. Below is activity for A Company during the year.
Sold Equipment for $65,000.
Purchased new Equipment for $140,000
Issued bonds for $100,000.
Paid $20,000 in dividends to common stockholders.
Received $200,000 when the company had a seasoned equity
offering (sold common stock).
Paid back a $300,000 Note Payable.
Fill out the Investing and Financing Section of A Company's cash
flow statement.
Cash Flow Statement ASU Cash Flow from Investing Activities Sale of Equipment V [Select] Purchase of new Equipment...
Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new Equipment...
Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new Equipment for $140,000 Issued bonds for $100,000. Paid $20,000 in dividends to common stockholders. Received $200,000 when the company had a seasoned equity offering (sold common stock). Paid back a $300,000 Note Payable. Fill out the Investing and Financing Section of A Company's cash flow statement. A Company Cash Flow Statement Cash Flow from Investing Activities ...
Quiz Tools If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of...
Quiz Tools If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of accumulated depreciation, how is this reported in the statement of cash flows? 7 10 Multiple Choice Collapse $8.000 cash inflow financing activities, $3,000 gain as an addition from net income under operating activities $8,000 inflow as an investing activity, and $3,000 gain as a subtraction from net income under operating activities $8,000 cash inflow as an investing activity only $8,000 cash outflow as an...
A company bought $400,000 of equipment with an expected life of 13 years and no residual...
A company bought $400,000 of equipment with an expected life of 13 years and no residual value. After 9 years the company sold the equipment for $98,500. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows? Multiple Choice o 598,500 is recorded as a cash inflow from investing activities and...
Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new Equipment for $140,000 Issue...
Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new Equipment for $140,000 Issued bonds for $100,000. Paid $20,000 in dividends to common stockholders. Received $200,000 when the company had a seasoned equity offering (sold common stock). Paid back a $300,000 Note Payable. Fill out the Investing and Financing Section of A Company's cash flow statement. A Company Cash Flow Statement Cash Flow from Investing Activities [ Select] [ Select] [Select] [ Select] Net Cash...
Click to watch the Tell Me More Learning Objective 2 video and then answer the questions...
Click to watch the Tell Me More Learning Objective 2 video and then answer the questions below. 1. While calculating cash flows from operating activities using the indirect method, which of the following is added to the net income? a. Increase in accounts payable b. Decrease in sundry creditors c. Decrease in common stock d. Increase in inventories 2. Silver Trading Corp. recorded a net income of $200,000 for the year 20X1. For the same period, the company purchased land...
Which of the following would appear in the investing activities section of the statement of cash...
Which of the following would appear in the investing
activities section of the statement of cash flows?
Which of the following would appear in the investing activities section of the statement of cash flows? Multiple Choice Cash inflow from interest revenue Cash outflow for the purchase of land Cash outflow for the purchase of supplies Cash inflow from issuance of common stock
On January 1, 2018, Moore, a fast-food company, had a balance in its Cash account of...
On January 1, 2018, Moore, a fast-food company, had a balance in its Cash account of $47,400. During the 2018 accounting period, the company had (1) net cash inflow from operating activities of $29,600, (2) net cash outflow for investing activities of $37,000, and (3) net cash outflow from financing activities of $18,500. Required a. Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) 29,600 MOORE COMPANY Statement of Cash Flows For...
If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of accumulated depreciation, how is this reported in the statement of cash flows? Multiple Choice $8,000 cash inflow in financing activities, and $3,000 loss as an addition to net income under operating activities $8,000 cash inflow in financing activities, $3,000 gain as an addition from net income under operating activities $8,000 inflow as an investing activity, and $3,000 gain as a subtraction from net income under operating...
1. Milner Co. sold a machine that cost $79,000 and had a book value of $45,000 for fro m Milner's comparative balance sheets are: 12/31/18 12/31/17 $800,000 $670,000 Machinery Accumulated depreciation 190,000 136,000 What four items should be shown on a statement of cash flows (indirect meth od) from this information? Show your calculations. (4 points) Investing activities - cash inflow from sale of Prop. Plant and Equip. Investing activities - cash outflow from purchase of Prop. Plant and Equip....
1. Below is activity for A Company during the year.
Sold Equipment for $65,000.
Purchased new Equipment for $140,000
Issued bonds for $100,000.
Paid $20,000 in dividends to common stockholders.
Received $200,000 when the company had a seasoned equity
offering (sold common stock).
Paid back a $300,000 Note Payable.
Fill out the Investing and Financing Section of A Company's cash
flow statement.
Cash Flow Statement ASU Cash Flow from Investing Activities Sale of Equipment V [Select] Purchase of new Equipment...
Quiz Tools If a business sells for $8,000 equipment that cost $25,000 and has $20,000 of accumulated depreciation, how is this reported in the statement of cash flows? 7 10 Multiple Choice Collapse $8.000 cash inflow financing activities, $3,000 gain as an addition from net income under operating activities $8,000 inflow as an investing activity, and $3,000 gain as a subtraction from net income under operating activities $8,000 cash inflow as an investing activity only $8,000 cash outflow as an...
A company bought $400,000 of equipment with an expected life of 13 years and no residual value. After 9 years the company sold the equipment for $98,500. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows? Multiple Choice o 598,500 is recorded as a cash inflow from investing activities and...
Below is activity for A Company during the year. Sold Equipment for $65,000. Purchased new Equipment for $140,000 Issued bonds for $100,000. Paid $20,000 in dividends to common stockholders. Received $200,000 when the company had a seasoned equity offering (sold common stock). Paid back a $300,000 Note Payable. Fill out the Investing and Financing Section of A Company's cash flow statement. A Company Cash Flow Statement Cash Flow from Investing Activities [ Select] [ Select] [Select] [ Select] Net Cash...
Click to watch the Tell Me More Learning Objective 2 video and then answer the questions below. 1. While calculating cash flows from operating activities using the indirect method, which of the following is added to the net income? a. Increase in accounts payable b. Decrease in sundry creditors c. Decrease in common stock d. Increase in inventories 2. Silver Trading Corp. recorded a net income of $200,000 for the year 20X1. For the same period, the company purchased land...
Which of the following would appear in the investing
activities section of the statement of cash flows?
Which of the following would appear in the investing activities section of the statement of cash flows? Multiple Choice Cash inflow from interest revenue Cash outflow for the purchase of land Cash outflow for the purchase of supplies Cash inflow from issuance of common stock
On January 1, 2018, Moore, a fast-food company, had a balance in its Cash account of $47,400. During the 2018 accounting period, the company had (1) net cash inflow from operating activities of $29,600, (2) net cash outflow for investing activities of $37,000, and (3) net cash outflow from financing activities of $18,500. Required a. Prepare a statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) 29,600 MOORE COMPANY Statement of Cash Flows For...
Most questions answered within 3 hours.
-
3) What are the typical social structures in a global city?
asked 2 hours ago -
Luther Corporation
Consolidated Balance Sheet
December 31, 2019 and 2018 (in $ millions)
Assets
2019
2018...
asked 2 hours ago -
(Expected rate of return and risk) Carter Inc. is evaluating a
security. Calculate the investment’s expected...
asked 4 hours ago -
What specific indicators can point to lack of progress for
African Americans in American society?
asked 5 hours ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 6 hours ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 6 hours ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 7 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 7 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 8 hours ago -
A .15kg rubber ball is bounced off a wall. Before hitting the
wall, the ball moves...
asked 9 hours ago -
A manufacturing company preparing to build a new plant is
considering three potential locations for it....
asked 9 hours ago -
B. If compound Y has approximately the same values of solubility
in toluene as compound X,...
asked 9 hours ago