1.A machine with a cost of $134,000, current year depreciation expense of $18,00
ID: 2463924 • Letter: 1
Question
1.A machine with a cost of $134,000, current year depreciation expense of $18,000 and accumulated depreciation of $87,000 is sold for $41,600 cash. The total amount that should be reported in the operating section of the statement of cash flow in, indirect method is: $18,000. $4,160. $59,600. $20,400. $23,400.
2,Analysis reveals that a company had a net increase in cash of $20,220 for the current year. Net cash provided by operating activities was $18,200; net cash used in investing activities was $10,100 and net cash provided by financing activities was $12,120. If the year-end cash balance is $24,300, the beginning cash balance was:
$4,080.
$16,140.
$44,520.
$40,440.
$39,440.
Explanation / Answer
Answer 1 Calculation of Profit / loss on sale of machinery Machine Original cost = $134000 Accumulated depreciation till date of sale = $87000 Hence the Net book value of machine = $134000 - $87000 = $47000 Machine sold for $41600 Hence loss on sale of machine = $47000 - $41600 = $5400 These loss is to be reported under operating section of cash flow along with current year depreciation. Total amount to be reported under operating section of Cash flow = $5400 + $18000 = $23400 Answer 2 Cash flow statement In $ Net Cash flow from operating activities 18200 Net Cash flow from investing activities -10100 Net Cash flow from financing activities 12120 Net cash flow 20220 (+) Beginning balance Ending balance 24300 Hence Beginning balance is a balancing figure = Ending balance - Net cash flow = $24300 - $20220 = $4080
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