Indicate the effect each separate transaction has on investing cash flows. (Amounts to be deducted should...

Indicate the effect each separate transaction has on investing cash flows. (Amounts to be deducted should be indicated with a minus sign.)

Sold a truck costing $49,000, with $25,600 of accumulated depreciation, for $11,600 cash. The sale results in a $11,800 loss.
Sold a machine costing $14,200, with $9,800 of accumulated depreciation, for $8,600 cash. The sale results in a $4,200 gain.
Purchased stock investments for $17,800 cash. The purchaser believes the stock is worth at least $33,600

Expert Solution


Transaction	Effect on investing cash flows.	Reason
a. Sold a truck costing $49,000, with $25,600 of accumulated depreciation, for $11,600 cash. The sale results in a $11,800 loss.	11,600	To check the effect on cash flow, only cash flow need to be considered. Cash inflow of $11600 can be seen due to sale of truck.
b. Sold a machine costing $14,200, with $9,800 of accumulated depreciation, for $8,600 cash. The sale results in a $4,200 gain.	8,600	To check the effect on cash flow, only cash flow need to be considered. Cash inflow of $8600 can be seen due to sale of machine.
c. Purchased stock investments for $17,800 cash. The purchaser believes the stock is worth at least $33,600	(17,800)	To check the effect on cash flow, only cash flow need to be considered. Cash outflow of $17800 can be seen due to purchase of investment. How much it actually worth does not impact cash flow situation

ekkarill92 answered 2 years ago

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