Question

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

Answer 1

Answer:

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)