Question

Mary Co. sold a machine that cost $78,000 and had a book value of $44,000 for $45,000. Data from Mary's comparative balance sheets are:

		12/31/21		12/31/20
Machinery		$780,000		$650,000
Accumulated depreciation		175,000		135,000

Complete the cash flow statement below. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Mary Co. Partial Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2021December 31, 2021For the Quarter Ended December 31, 2021
Cash flows from operating activities
Gain on Sale of Machinery    Purchase of Machinery    Sale of Machinery    Loss on Sale of Machinery    Depreciation Expense		$
Loss on Sale of Machinery    Sale of Machinery    Depreciation Expense    Purchase of Machinery    Gain on Sale of Machinery
Cash flows from investing activities
Loss on Sale of Machinery    Depreciation Expense    Gain on Sale of Machinery    Purchase of Machinery    Sale of Machinery
Gain on Sale of Machinery    Purchase of Machinery    Sale of Machinery    Depreciation Expense    Loss on Sale of Machinery

Answer 1

Solution:
	Statement of Cash Flows - Indirect Approach
		Amount in	Amount in
	Net Cash flows from operating activities
	Depreciation Expenses	$                            74,000
	Gain on Sale of Machinary ($44,000 - $ 45,000)	$                            -1,000
			$                       73,000
	Net cash from operating activities		$                       73,000
	Cash flows from investing activities
	Purchase of Machinary	$                      -2,08,000
	Sale of Machinary	$                            45,000
	Net cash used in investing activities		$                  -1,63,000
	Cash and cash equivalents at end of period		$                     -90,000
	Calculation of Purchase of Machinary in Cash
	Beginning Balance	$                        6,50,000
	Less: Machinary Sold	$                            78,000
	Net Balance (A)	$                        5,72,000
	Ending Balance of Equipment (B)	$                        7,80,000
	Purchase of Machinary (B-A)	$                        2,08,000
	Calculation of Depreciation Expenses
	Beginning Balance of Accumulated Depreciation	$                        1,35,000
	Less: Accumulated Depreciation on Assets Sold($ 78,000 - $ 44,000)	$                            34,000
	Net Balance (A)	$                        1,01,000
	Ending balance of Accumulated Depreciation (B)	$                        1,75,000
	Depreciation Expenses of the year (B-A)	$                            74,000