Equipment with an original cost of $64,640 and accumulated depreciation of $25,4
ID: 2494107 • Letter: E
Question
Equipment with an original cost of $64,640 and accumulated depreciation of $25,484 was sold at a loss of $6,315. Find the change in cash as a result of this transaction.
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Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $8,389 net loss. Which of the following would be included in Zach Corporation's journal entry?
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increase by $32,841 decrease by $25,484 increase by $64,640 decrease by $6,315Zach Company owns 40% of the voting stock of Tomas Corporation and uses the equity method in recording this investment. Tomas Corporation reported a $8,389 net loss. Which of the following would be included in Zach Corporation's journal entry?
Select the correct answer.
Debit to the investment account for $3,355.60 Credit to the investment account for $3,355.60 Debit to the investment account for $8,389.00 Credit to a loss account for $3,355.60Explanation / Answer
Original Cost 64640 accumulated depriciation 25484 Net Book value 39156 Less Sold at a loss 6315 Cash Received 32841 Hence , cash received in this transaction is 32841 change in cash is it increases by 32841 Zack share of loss = 8389 * 40% = 3355.60 Since it id a loss , the value of investment decrease by its share of loss as per the equit method Hence , credit to investment account for 3355.60 will be included in the journal entry for recording its share in the loss
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