Reporting Land Transactions on Statement of Cash FlowsOn the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows:ACCOUNT LandACCOUNT NO.    BalanceDateItemDebitCreditDebitCreditJan.1  Balance  1,296,000  Mar.12  Purchased for cash389,000  1,685,000  Oct.4  Sold for $214,000 183,000 1,502,000   ItemSection of Statement ofCash FlowsAdded or DeductedAmountMar. 12: Purchase of fixed assetInvesting activities section Deducted $Oct. 4: Sale of fixed assetInvesting activities section Added $Gain on sale of fixed asset (assume the indirect method)Operating activities section Deducted $

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Asked Nov 20, 2019
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Reporting Land Transactions on Statement of Cash Flows

On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows:

ACCOUNT Land ACCOUNT NO.
        Balance
Date Item Debit Credit Debit Credit
Jan. 1     Balance     1,296,000    
Mar. 12     Purchased for cash 389,000     1,685,000    
Oct. 4     Sold for $214,000   183,000   1,502,000    

 

Item Section of Statement of
Cash Flows
Added or Deducted Amount
Mar. 12: Purchase of fixed asset Investing activities section  Deducted  $
Oct. 4: Sale of fixed asset Investing activities section  Added  $
Gain on sale of fixed asset (assume the indirect method) Operating activities section  Deducted  $
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Expert Answer

Step 1

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Operating activities include cash inflows and outflows from business operations. Investing activities includes cash inflows and cash outflows from purchase and sale of land or equipment, or investments. Financing activities includes cash inflows and outflows from issuance of common stock and debt, payment of debt and dividends.

Step 2

Indicate the items to be reported on the sta...

Section of Statement
Added or
Item
Amount
Deducted
of Cash Flows
Investing activities
section
March 12: Purchase of fixed asset
Deducted
$389,000
Investing activities
section
October 4: Sale of fixed asset
Added
$214,000
Operating activities
section
Gain on sale of fixed asset
Deducted
$31,000
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Section of Statement Added or Item Amount Deducted of Cash Flows Investing activities section March 12: Purchase of fixed asset Deducted $389,000 Investing activities section October 4: Sale of fixed asset Added $214,000 Operating activities section Gain on sale of fixed asset Deducted $31,000

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