in 2018, Anderson Company purchased equipment for $365,000 and also sold some special purpose machinery with...
in 2018, Anderson Company purchased equipment for $365,000 and also sold some special purpose machinery with a book value of $155,800 for $183,000. In its statement of cash flows for 2018, Anderson should report the following with respect to the above transactions:
-
$182,000 net cash used by investing activities; $27,200 net cash provided by operating activities.
-
$182,000 net cash used by investing activities.
-
$365,000 net cash used by investing activities.
-
$365,000 cash used by investing activities; $183,000 cash provided by financing activities.
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Homework Answers
Ans. Option 2nd
Explanation: Sale and purchase transactions of fixed assets (Equipment and Machinery) are listed under Investing activity section of cash flow statement.
Calculations:
Particulars Amount
Sale of machinery. $183,000
Purchase of equipment. -$365,000
Net cash used by Investing Activities. -$182,000
*Gain on sale of machinery will be reported in the section of Operating activities with negative sign.
Gain on sale of machinery = Selling price - Book value
= $183,000 - $155,800
= $27,200
So, net cash used by (not provided by)Operating activities will be $27,200.
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