Question

Please answer within the hour

1a. A machine (a long-term asset) with a cost of $147,000 and accumulated depreciation of $93,500 is sold for $67,000 cash. The amount that should be reported in the operating activities section of the statement of cash flows reported using the direct method is:

a. $26,500

b. $67,000

c. $53,500

d. $0

e. $13,500

1b. A machine (a long-term asset) with a cost of $152,000 and accumulated depreciation of $96,000 is sold for $48,800 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows using the indirect method is:

$22,500.

$71,300.

$4880.

$7200.

$17,700.

1c. A company reported that its bonds (a long-term liability) with a par value of $50,000 and a carrying value of $61,000 are sold for $64,800 cash, resulting in a loss of $3,800. The amount to be reported on the statement of cash flows under cash flows from financing activities is:

a. $(3,800)

b. $(61,000)

c. $11,000

d. $(64,800)

e. $(11,000)

Answer 1

1a.

Sale of machinery for $67,000 at a gain will not be shown under the operating activities section of the statement of cash flows While using direct method.

The amount that should  be reported in the operating activities section of the statement of cash flows reported using the direct method is = $0

Correct option is d.

1b.

Cost of machine = $152,000

accumulated depreciation = $96,000

Book value of machine = Cost of machine- accumulated depreciation

= 152,000-96,000

= $56,000

Sale price of machine = $48,800

Loss on sale of machine = Book value of machine - Sale price of machine

= 56,000-48,800

= $7,200

Loss on sale of machine $7,200 should be reported of the statement of cash flows using indirect method.

Fourth option is correct.

1c.

Bonds payable were retired by paying cash of $64,800, hence the amount to be  reported on the statement of cash flows under cash flows from financing activities is ($64,800).

Correct option is d.