Chapter 12, Problem 10E

Exercise

Reconstructed entries

For each of the following separate transactions, (a) prepare the reconstructed journal entry and (b) identify the effect it has, if any, on the investing section or financing section of the statement of cash flows.

1. Sold a building costing $30,000, with $20,000 of accumulated depreciation, for $8,000 cash, resulting in a $2,000 loss.
2. Acquired machinery worth $10,000 by issuing $10,000 in notes payable.
3. Issued 1,000 shares of common stock at par for $2 per share.
4. Notes payable with a carrying value of $40,000 were retired for $47,000 cash, resulting in a $7,000 loss.