Exercise 23-18 The accounts below appear in the ledger of Teal Company. Retained
ID: 2590618 • Letter: E
Question
Exercise 23-18
The accounts below appear in the ledger of Teal Company.
Retained Earnings
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Equipment
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Accumulated Depreciation—Equipment
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From the postings in the accounts above, indicate how the information is reported on a statement of cash flows by preparing a partial statement of cash flows using the indirect method. The loss on sale of equipment (November 15) was $5,900. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Retained Earnings
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Jan. 1, 2017 Credit Balance $42,100 Aug. 15 Dividends (cash) $15,100 27,000 Dec. 31 Net Income for 2017 $40,300 67,300Equipment
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Jan. 1, 2017 Debit Balance $139,300 Aug. 3 Purchase of Equipment $62,300 201,600 Sept. 10 Cost of Equipment Constructed 48,500 250,100 Nov. 15 Equipment Sold $55,500 194,600Accumulated Depreciation—Equipment
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Jan. 1, 2017 Credit Balance $84,800 Apr. 8 Major Repairs $21,100 63,700 Nov. 15 Accum. Depreciation on Equipment Sold 25,300 38,400 Dec. 31 Depreciation for 2017 $16,600 55,000Explanation / Answer
Teal Company Statement of cash flows (partial) (using the indirect method) For the year ended December 31, 2017 Cash Flows from Operating Activities: Net Income $ 40,300 Adjustments to reconcile net income to Add: Depreciation $ 16,600 Add: loss on sale of equipment $ 5,900 $ 22,500 Net Cash provided by Operating Activities $ 62,800 Cash Flows from Investing Activities: Purchase of Equipment $ (62,300) Cost of Equipment Constructed $ (48,500) Equipment Sold $ 55,500 Net Cash provided by Investing Activities $ (55,300) Cash Flows from Financing Activities: Dividends (cash) $ (15,100) Net Cash provided by Financing Activities $ (15,100)
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