These three accounts appear in the general ledger of Tovar Corp. during 2010:
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 53,000 283,000
Nov.10 Cost of equipment sold 49,000 234,000
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 28,000 69,000
Retained Earnings
Date Debit Credit Balance
Jan. 1 Balance 105,000
Aug. 23 Dividends (cash) 19,000 86,000
Dec. 31 Net income 72,000 158,000
From the postings in the accounts, indicated how the information is
reported on the statement of cash flows, using the indirect method
below. The loss on sale of equipment was $8,000. (Hint: Cost of
equipment constructed is reported in the investing activities section as
a decrease in cash of $53,000.)
Click here for the solution: These three accounts appear in the general ledger of Tovar Corp. during 2010
