An analysis of the general ledger accounts indicates that delivery equipment, which cost $75,000 and on which accumulated depreciation totaled $58,000 on the date of sale, was sold for $20,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows. Transactions Section of Statement of Cash Flows Added or Deducted $75,000 cost of office equipment $58,000 accumulated depreciation $20,200 sales price $3,200 gain on sale of equipment (assume the indirect method is used)

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Business

Louisa

8 June, 10:17

An analysis of the general ledger accounts indicates that delivery equipment, which cost $75,000 and on which accumulated depreciation totaled $58,000 on the date of sale, was sold for $20,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows. Transactions Section of Statement of Cash Flows Added or Deducted $75,000 cost of office equipment $58,000 accumulated depreciation $20,200 sales price $3,200 gain on sale of equipment (assume the indirect method is used)

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Irwin · Answer 1

Basically there are three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

2. Investing activities: It records those activities which include purchase and sale of the fixed assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.

So, the items reported or not reported is shown below:

1. $75,000 cost of office equipment - not reported

2. $58,000 accumulated depreciation - not reported

3. $20,200 sales price - investing activities - added

4. $3,200 gain on sale of equipment - operating activities - deducted