Question

On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows:

ACCOUNT Land ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 885,000
Mar. 12 Purchased for cash 274,000 1,159,000
Oct. 4 Sold fo $151,000 129,000 1,030,000
Item Section of Statement of Cash Flows Added or Deducted Amount
Mar. 12: Purchase of fixed asset $
Oct. 4: Sale of fixed asset $
Gain on sale of fixed asset (assume the indirect method) $
Statement of Cash Flow:
The statement of cash flow includes the operating, investing, and financing activities sections. The statement combines the changes to the last two balance sheets and the most current income statement to reconcile changes in cash balances between two periods.

Answer 1

Flows Added

Oct. 4: Proceeds from Sale of fixed asset $151,000

Oct. 4: Gain on sale of fixed asset $22,000

Flows Deducted

Mar. 12: Purchase of fixed asset $274,000

Step-by-step explanation:

The Cash flow statement is prepared under the following headings :

1. Cash flow from operating activities
2. Cash flow from investing activities
3. Cash flow from financing activities

Therefore form the transactions we need to establish what amount fall in which category.

Here is an extract of the Cash flow statement based on the given data

Cash flow from Operating Activities

Adjustment to non-cash items

Gain on sale of asset ($151,000 - $129,000) $22,000

Cash flow from Investing Activities

Purchase of Asset ($274,000)

Proceeds from sale of Asset $151,000

Cash flow from Financing Activities