(Supplement B) Computing and Reporting Cash Flow Effects of the Sale of Equipment
During the period, Wong Company sold some excess equipment at a loss. The following information was collected from the company’s accounting records:
From the Income Statement |
|
Depreciation expense | $ 820 |
Loss on sale of equipment | 4,400 |
From the Balance Sheet |
|
Beginning equipment | 19,000 |
Ending equipment | 12,100 |
Beginning accumulated depreciation | 1,800 |
Ending accumulated depreciation | 1,900 |
No new equipment was bought during the period.
Required:
1. For the equipment that was, sold. determine its original cost. its 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.)
2. Wong 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?
3. What amount related to the sales would be added or subtracted in the computation of Net Cash Flows from Investing Activities?
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