Question Details

The company reported a loss on the sale of equipment 



1
At January 1, 2011, Bergman Enterprises reported a balance in the Equipment account of $45,000.  During the year the company purchased equipment with a cost of $60,000 and sold equipment with a book value of $30,000.  The company reported a loss on the sale of equipment of $4,000. Assume the indirect method is used.

Instructions
Determine what amount will be reported in (a) the operating activities section and (b) the investing activities section with regard to the purchase and sale of equipment.


2
Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.
								Code
	Cash Flows From Operating Activities
		Add to Net Income	A
		Deduct from Net Income	D

	1.	Increase in accounts receivable
	2.	Increase in inventory
	3.	Decrease in prepaid expenses
	4.	Decrease in accounts payable
	5.	Increase in accrued liabilities
	6.	Increase in income taxes payable
	7.	Depreciation expense
	8.	Loss on sale of investment
	9.	Gain on disposal of equipment
	10.	Amortization expense




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