Statement of cash flows : It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company. Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities . Cash flows from operating activities: These are the cash produced by the normal business operations. The below table shows the way of calculation of cash flows from operating activities: Cash flows from operating activities (Indirect method) Add: Decrease in current assets Increase in current liability Depreciation expense and amortization expense Loss on sale of plant assets Deduct: Increase in current assets Decrease in current liabilities Gain on sale of plant assets Net cash provided from or used by operating activities Table (1) To Determine: The net income reported by C Incorporation for the year ended December 31.

Question

A copy machine cost $78,000 when new and has accumulated depreciation of $72,000. Suppose Print and Photo Center sold the machine for $6,000. What is the result of this disposal transaction? Give me Answer

Answer 1

Question

Chapter 13, Problem 13.15EX

A.

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Cash flows from operating activities: These are the cash produced by the normal business operations.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Indirect method)

Add: Decrease in current assets
         Increase in current liability
         Depreciation expense and amortization expense
         Loss on sale of plant assets

Deduct: Increase in current assets
              Decrease in current liabilities
              Gain on sale of plant assets
Net cash provided from or used by operating activities

Table (1)

To Determine: The net income reported by C Incorporation for the year ended December 31.

B.

To determine

To Explain: Why from net income is different from net cash flow from operating activities.

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A copy machine cost $78,000 when new and has accumulated depreciation of $72,000. Suppose Print and Photo Center sold the machine for $6,000. What is the result of this disposal transaction? Give me Answer

A copy machine cost $78,000 when new and has accumulated depreciation of $72,000. Suppose Print and Photo Center sold the machine for $6,000. What is the result of this disposal transaction?

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