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16 January, 15:02

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

a. Sold a truck costing $40,000, with $22,000 of accumulated depreciation, for $8,000 cash. The sale results in a $10,000 loss.

b. Sold a machine costing $10,000, with $8,000 of accumulated depreciation, for $5,000 cash. The sale results in a $3,000 gain

c. Purchased stock investments for $16,000 cash. The purchaser believes the stock is worth at least $30,000 Cash flows from investing activities

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  1. 16 January, 15:17
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    Cash flow from investing activities

    Cash received from sale of truck = $8,600

    Cash received from sale of machine = $5,600

    Cash paid for purchase of investment = - $16,300

    Net cash used by investing activities = ($2,100)

    Explanation:

    Given:

    a. Sold a truck costing $40,000, with $22,000 of accumulated depreciation, for $8,000 cash. The sale results in a $10,000 loss.

    b. Sold a machine costing $10,000, with $8,000 of accumulated depreciation, for $5,000 cash. The sale results in a $3,000 gain

    c. Purchased stock investments for $16,000 cash. The purchaser believes the stock is worth at least $30,000

    Cash flow from investing activities

    Cash received from sale of truck = $8,600

    Cash received from sale of machine = $5,600

    Cash paid for purchase of investment = - $16,300

    Net cash used by investing activities = ($2,100)
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