Reference no: EM131987624

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

From the Income Statement

Depreciation expense$1,010

Loss on sale of equipment 3,800

From the Balance Sheet Beginning equipment 20,400

Ending equipment 11,400

Beginning accumulated depreciation 1,860

Ending accumulated depreciation 1,810

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 and accumulated depreciation T-accounts to infer the book value of the equipment sold.)

2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities?

3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities?