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A machine with a book value of $38,000 is sold for $32,000. Which of the following answers would accurately represent the effects of the sale on the financial statements? Assets = Liab. + Equity Rev./Gain − Exp./Loss = Net Inc. Cash Flow A. 38,000 = NA + 38,000 38,000 − NA = 38,000 38,000 IA B. (6,000 ) = NA + (6,000 ) NA − 6,000 = (6,000 ) 6,000 OA C. (6,000 ) = NA + (6,000 ) NA − 6,000 = (6,000 ) 6,000 IA D. (6,000 ) = NA + (6,000 ) NA − 6,000 = (6,000 ) 32,000 IA

Respuesta :

Answer:

D. (6,000 ) = NA + (6,000 ) NA − 6,000 = (6,000 ) 32,000 IA

Explanation:

Since it is given that the book value of machine is $38,000 and it is sold for $32,000

So it impacts on the financial statement is as follows

Assets = -$6,000 Since sale value is less than the book value

Liabilities = NA as it does not impact the liabilities

Equity = -$6,000

Rev/Gain  = $0  

Exp./Loss = $6,000 as there is a loss of $6,000 by deducting the $32,000 from the $38,000

Net inc. = -$6,000  

Cash flow = $32,000 IA. The sale value of the machinery is shown in the investing activity as a cash inflow