Question

inment CALCULATOR FULL SCREEN PRINTER Exercise 13-6 The three accounts shown below appear in the general ledger of Herrick Corp. during 2015. Equipment Debit Credit Date Jan. 1 July 31 Sept. 2 Nov. 10 Balance Purchase of equipment Cost of equipment constructed Cost of equipment sold 68,820 52,720 Balance 160,230 229,050 281,770 232,210 49,560 Date Accumulated Depreciation-Equipment Debit Balance Accumulated depreciation on equipment sold 29,350 Depreciation for year mo Jan. 1 Nov. 10 Dec. 31 Credit Balance 69,990 40,640 70,170 29,530 Retained Earnings dy Date Debit Credit Jan. 1 Aug. 23 Dec. 31 Balance Dividends (cash) Net income 15,200 Balance 104,660 89,460 166,460 77,000 From the postings in the accounts, indicate how the information is reported on a statement of cash flo indirect method. The loss on disposal of equipment was $6,630. (Hint: Cost of equipment constructed the investing activities section as a decrease in cash of $52,720.) (Show amounts that decrease ca either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) HERRICK CORP Privacy Policy. I 2000-2020 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc.

Answer 1

Solution:

Cash Flow Statement
	Amount in $	Amount in $
Opening Cash Balance
Cash From Operational Activities
Net Income	77,000
Depreciation for the Year	29,530
Loss on disposal of Equipment	6,630	113,160
Cash From Investing Activities
Purchase of Equipment	(68,820)
Cost of Equipment Constructed	(52,720)
Sale of Equipment	13,580	(107,960)
Cash From Financing Activities
Dividend Paid	(15,200)	(15,200)
Closing Cash Balance

Working Note:

Calculation of selling price of equipment
	Amount in $
Cost of Equipment Sold	49,560
Accumulated Depreciation of equipment sold	(29,350)
Loss on disposal of Equipment	(6,630)
Sale Price of Equipment	13,580