Question

In: Finance

The Blandings Home Construction Company purchased a new crane for $350,000 this year. It sold the...

The Blandings Home Construction Company purchased a new crane for $350,000 this year. It sold the old crane for $50,000. At the time it had a net book value of $20,000. Assume any profit on the sale of old equipment is taxed at 21%. These were the only transactions that affected investing activities this year. Construct the Cash Flow from Investing Activities section of the statement of cash flows to concisely convey the maximum information to readers of the company's financial statements. Use a minus sign, to indicate any decreases in cash or cash outflows.

Cash From Investing Activities
Investment in new equipment $  
Sale of surplus equipment after tax    
Net new investment

Solutions

Expert Solution

Statement of Cash flows
Cash flow from Investing Activities Amount(in $) Amount(in $)
Purchase of new crane -350000
Sale of old crane after tax 43700
Net Cash outflow from Investing Activities -3,06,300

Working for Cash inflow after tax from Sale of old crane

Sale price = 50000, Book vale = 20000

Profit = 50000-20000 = 30000

Tax on Profit = 30000*0.21 = 6300

Net Cash flow on Sale = 50000 - 6300 = $43700

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Problem 9-4 Comparison of Depreciation Methods Italian Construction Company purchased a new crane for $360,500 at...
Problem 9-4 Comparison of Depreciation Methods Italian Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6....
Problem 9-4 Comparison of Depreciation Methods Italian Construction Company purchased a new crane for $360,500 at...
Problem 9-4 Comparison of Depreciation Methods Italian Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6....
A company purchased land on which to construct a new building for a cost of $350,000....
A company purchased land on which to construct a new building for a cost of $350,000. Additional costs incurred were: Real estate broker's commissions…………………………. $24,500 Legal fees incurred in the purchase of the real estate…………   1,500 Landscaping……………………………………………….. 8,000 Cost to remove old house located on land……………      3,000 Proceeds from selling materials salvaged from old house    1,000 What total dollar amount should be charged to Land and what amount should be charged to Building or other accounts? Show your work 5...
On January 2, 2020, Crane Company began construction of a new citrus processing plant. The automated...
On January 2, 2020, Crane Company began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2021. Expenditures for the construction were as follows: January 2, 2020 $ 604000 September 1, 2020 1809600 December 31, 2020 1809600 March 31, 2021 1809600 September 30, 2021 1196000 Crane Company borrowed $3240000 on a construction loan at 12% interest on January 2, 2020. This loan was outstanding during the construction period. The company...
Bascomb Company purchased $420,000 in merchandise on account during the month of April, and merchandise costing $350,000 was sold on account for $425,000
 Provide the solution that is required, making sure to demonstrate how you obtained the answer. 4) Bascomb Company purchased $420,000 in merchandise on account during the month of April, and merchandise costing $350,000 was sold on account for $425,000. Required: 1. Prepare journal entries to record the purchases and sales assuming Bascomb uses a perpetual inventory system. 2. Prepare journal entries to record the purchases and sales assuming Bascomb uses a periodic inventory system. 5) Meteor Co. purchased merchandise on March 4, 2018, at a...
On March 2, Crane Company sold $946,600 of merchandise to Sheridan Company
Prepare the journal entries to record the following transactions on Sheridan Company’s books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)(a)        On March 2, Crane Company sold $946,600 of merchandise to Sheridan Company, terms 2/10, n/30. The cost of the...
Crane Landscaping began construction of a new plant on December 1, 2020. On this date, the...
Crane Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $145,200 in cash. In addition, it paid $2,400 in surveying costs and $3,840 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,360, with $720 being received from the sale of materials. Architectural plans were also formalized on December 1, 2020, when the architect was paid $31,200. The necessary...
On July 1 of year 1, Elaine purchased a new home for $890,000. At the time...
On July 1 of year 1, Elaine purchased a new home for $890,000. At the time of the purchase, it was estimated that the property tax bill on the home for the year would be $17,800 ($890,000 × 2%). On the settlement statement, Elaine was charged $8,900 for the year in property taxes and the seller was charged $8,900. On December 31, year 1 Elaine discovered that the real property taxes on the home for the year were actually $18,800....
On July 1 of year 1, Elaine purchased a new home for $795,000. At the time...
On July 1 of year 1, Elaine purchased a new home for $795,000. At the time of the purchase, it was estimated that the property tax bill on the home for the year would be $15,900 ($795,000 × 2%). On the settlement statement, Elaine was charged $7,950 for the year in property taxes and the seller was charged $7,950. On December 31, year 1, Elaine discovered that the real property taxes on the home for the year were actually $16,900....
Problem 21-2 (Essay) Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year noncancelable...
Problem 21-2 (Essay) Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year noncancelable contract starting January 1, 2017. Terms of the lease require payments of $33,000 each January 1, starting January 1, 2017. Cleveland will pay insurance, taxes, and maintenance charges on the crane, which has an estimated life of 12 years, a fair value of $240,000, and a cost to Cleveland of $240,000. The estimated fair value of the crane is expected to be $45,000 at...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT