Harp’s Business Machines Inc. reported the following items from its comparative
ID: 2499258 • Letter: H
Question
Harp’s Business Machines Inc. reported the following items from its comparative balance sheet for the calendar year 2008:
2008
2007
Inventory
$125,000
$100,000
Land
100,000
200,000
Building
570,000
500,000
Equipment
45,000
30,000
Accumulated depreciation
(105,000)
(50,000)
Notes payable
100,000
150,000
Common stock
300,000
200,000
Additional information for 2008:
1. A piece of land was sold for $65,000, resulting in a $5,000 gain.
2. A smaller section of land was sold for $26,000, resulting in a $14,000 loss.
3. A building was started and completed costing $70,000. All costs were paid in cash.
4. Depreciation expense totaled $55,000 for the year.
Required:
Determine the cash flows from investing activities for Harp’s Business Machines Inc. for 2008.
2008
2007
Inventory
$125,000
$100,000
Land
100,000
200,000
Building
570,000
500,000
Equipment
45,000
30,000
Accumulated depreciation
(105,000)
(50,000)
Notes payable
100,000
150,000
Common stock
300,000
200,000
Explanation / Answer
Harp's Business Machines Inc. Cash Flow from Investing Activities For the year ended 2008 Particulars Amount($) Sale of Piece of Land 65,000 Sale of smaller section of land 26,000 Investment in Building -70,000 Purchase of Equipment -15,000 Total Net Cash Flow from Investing Activities 6,000
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