Question Details

The loss on sale of equipment 



1

The three accounts shown below appear in the general ledger of Glaus Corp. during 2011.

	Equipment	
Date	Debit	Credit	Balance
Jan.	1	Balance		160,000
July 	31	Purchase of equipment	70,000	230,000
Sept.	2	Cost of equipment constructed	58,000	288,000
Nov.	10	Cost of equipment sold		46,000	242,000

	Accumulated Depreciation—Equipment	
Date	Debit	Credit	Balance
Jan.	1	Balance			71,000
Nov. 	10	Accumulated depreciation on
	        equipment sold	30,000		41,000
Dec.	31	Depreciation for year		23,000	64,000
 
	Retained Equipment	
Date	Debit	Credit	Balance
Jan.	1	Balance			105,000
Aug.	23	Dividends (cash)	14,000		91,000
Dec.	31	Net income		52,000	143,000

Instructions
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $58,000.)




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