Brief Exercise 12-8 The T-accounts for Equipment and the related Accumulated Dep
ID: 2575188 • Letter: B
Question
Brief Exercise 12-8 The T-accounts for Equipment and the related Accumulated Depreciation-Equip. for Coldsmith Company at the end of 2014 are shown here Equipment Beg. bal Acquisitions End. bal. 153,520Disposals 42,218 79,830 191,132 Accum. Depr.-Equip. 9,787 Beg. bal. Depr. exp Disposals 85,396 23,028 End. bal In addition, Coldsmith Company's income statement reported a loss on the disposal of plant assets of $6,717. What amount was reported on the statement of cash flows as "cash flow from sale of equipment"? Cash flow from sale of equipmentExplanation / Answer
Cost of equipment disposed = 42,218
Accumulated depreciation on equipment disposed = 9,787
Carrying value of disposed equipment disposed = cost - accumulated depreciation
= 42,218 - 9,787
= 32,431
Equipment was sold at a loss of 6,717
Sale value of equipment = Carrying value - Loss on sale
= 32,431 - 6,717
= 25,714
Cash flow from sale of equipment = 25,714.
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Current cash debt coverage = Net cash provided by operating activities / Average current liabilities
Cash debt coverage = Net cash provided by operating activities / Average total liabilities
Free cash flow = Net cash provided by operating activities - Capital expenditures
1.58 times
(80,590/50,880)
1.00 times
(100,480/100,720)
0.45 times
(80,590/179,490)
0.40 times
(100,480/249,370)
40,350
(80,590-40,240)
30,060
(100,480-70,420)
Patton Corporation Sager Corporation Liquidity - Current cash debt coverage1.58 times
(80,590/50,880)
1.00 times
(100,480/100,720)
Solvency - Cash debt coverage0.45 times
(80,590/179,490)
0.40 times
(100,480/249,370)
Free cash flow40,350
(80,590-40,240)
30,060
(100,480-70,420)
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