Question

Cah Flow Effects

During the period, Wong Company sold some excess equipment at a loss. The following information collected from the company's accounting records:

From the Income Statement
Depreciation expense$820
Loss on sale of equipment$4,400
From the Balance Sheet
Beginning equipment$19,000
Endingequipment$12,100
Beginning accumulated depreciation$1,800
Ending accumulated depreciation$1,900

No new equipment was bought during the period.

Required:
1. For the equipment that was sold, determine its original cost., its accumulated depreciation, and the cash received from the sale. (Use the equipment andaccumulated depreciation T-accounts to infer the book value of the equipment sold.)
2. Wong Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added orsubtracted in the computation of Net Cash Flows from Operating Activities?
3. What amount related to the sales would be added or subtracted in the computation of Net Cash Flows from Investing Activities?

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