Answer:
The net cash flow is $7,844 from the sale of the assets.
Explanation:
<em>Step 1: Determine the average fixed assets</em>
The average net fixed assets can be determined using the expression;
Av=(Fb+Fe)/2
where;
Av=average net fixed assets
Fb=net fixed assets at the beginning of the year
Fe=net fixed assets at the end of the year
In our case;
Av=unknown
Fb=$216,525
Fe=$208,650
replacing;
Av=(216,525+208,650)/2=$212,587.50
The average net fixed assets=$212,587.50
<em>Step 2: Determine the net fixed assets after accounting for depreciation</em>
This can be expressed as;
Net fixed assets=average net fixed assets-depreciation
where;
average net fixed assets=$212,587.50
depreciation=$41,320
replacing;
Net fixed assets=(212,587.50-41,320)=$171,267.50
Step 3: Debit the fixed asset account and credit the cash account
Account Debit Credit
Fixed assets 7,844 163,423.50
Cash flow 163,423.50 7,844
The net cash flow is $7,844 from the sale of the assets.
