A machine with a cost of $130,000, current year depreciation expense of $17,000
ID: 2483017 • Letter: A
Question
A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The amount(s) that should be reported in the operating section of the statement of cash flows is:
Options:
$17,000.
$4,000.
$57,000.
$21,000.
$22,000.
HH Consulting & Design provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries will HH Consulting & Design make to record this transaction?
Options:
$17,000.
$4,000.
$57,000.
$21,000.
$22,000.
Explanation / Answer
(1)
Amount to be reporting in operating section = Depreciation Expense for current year + Loss on Sale
Loss on Sale of Machine = $40,000- ($130,000-$85,000) = $5,000
Depreciation Expense for current year = $17,000
Thus, Total amount to be shown in operating section = $17,000 + $5,000 = $22,000
(2) The journal entry to record this transaction is Option-d
Accounts Receivable.............Dr 900
To Consulting Revenue 800
To Design Revenue 100
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