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Cornerstones of Financial Accounti...

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Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Determining Cash Flows from Investing Activities

Burns Company’s 2019 and 2018 balance sheets presented the following data for equipment:

Chapter 11, Problem 41E, Determining Cash Flows from Investing Activities Burns Companys 2019 and 2018 balance sheets

During 2019, equipment costing $41,000 with accumulated depreciation of $36,700 was sold for cash, producing a $3,200 gain.

Required:

1. Calculate the amount of depreciation expense for 2019.

2. Calculate the amount of cash spent for equipment during 2019.

3. Calculate the amount that should be included as a cash inflow from the disposal of equipment.

To determine

(a)

Introduction:

Income from investing activities is a thing on the income articulation that reports the total change in an organization’s money position coming about because of speculation additions or misfortunes and changes coming about because of sums spent on interests in capital resources, for example, plant and equipment.

To compute:

Calculate the amount of depreciation expense for 2019.

Explanation

Prepare Equipment account and accumulated depreciation

Equipment Accounts

Particular Amount ($) Particular Amount ($)
Balance b/d
Gain on sale of Equipment
Bank a/c (Purchase)
262,000
3200
104000
369,200
Bank a/c (sale)
Accumulated Depreciation
Balance c/d
7,50...
To determine

(b)

Introduction:

Income from investing activities is a thing on the income articulation that reports the total change in an organization’s money position coming about because of speculation additions or misfortunes and changes coming about because of sums spent on interests in capital resources, for example, plant and equipment.

To compute:

Calculate the amount of cash spent for equipment during 2019.

To determine

(c)

Introduction:

Income from investing activities is a thing on the income articulation that reports the total change in an organization’s money position coming about because of speculation additions or misfortunes and changes coming about because of sums spent on interests in capital resources, for example, plant and equipment.

To compute:

Calculate the amount that should be included as a cash flow inflow from the disposal of equipment.

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