How do you calculate the sale of equipment for the following problem?
The three accounts shown below appear in the general ledger of Herrick Corp. during 2015.
| Equipment |
| Date |
Debit |
Credit |
Balance |
| Jan. 1 |
Balance |
159,170 |
| July 31 |
Purchase of equipment |
69,120 |
228,290 |
| Sept. 2 |
Cost of equipment constructed |
54,430 |
282,720 |
| Nov. 10 |
Cost of equipment sold |
52,000 |
230,720 |
| |
| Accumulated Depreciation-Equipment |
| Date |
Debit |
Credit |
Balance |
| Jan. 1 |
Balance |
71,050 |
| Nov. 10 |
Accumulated depreciation on equipment sold |
28,450 |
42,600 |
| Dec. 31 |
Depreciation for year |
27,680 |
70,280 |
| |
| Retained Earnings |
| Date |
Debit |
Credit |
Balance |
| Jan. 1 |
Balance |
105,150 |
| Aug. 23 |
Dividends (cash) |
12,510 |
92,640 |
| Dec. 31 |
Net income |
76,770 |
169,410
|
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $4,460. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $54,430.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)