Formula: Subtract; Cell Referencing

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Using Excel to Determine the Cash Flow Effects of Equipment Disposals

Student Work Area

Required: Provide input into cells shaded in yellow in this template. Use mathematical formulas with cell references to the Problem area and this work area as indicated.

PROBLEM

The T accounts for equipment and the related accumulated depreciation for Trevis Corporation are as follows:

Equipment

What will be reported on the cash flow statement with regard to the sale of equipment if Trevis uses the indirect method? Hint: Prepare the journal entry to see the effects of the sale.

Beg. Balance

80,000

Purchases

41,600

Disposals

24,000

End. Balance

97,600

Journal entry for the sale:

Debit

Credit

Cash

Accumulated DepreciationEquipment

Equipment

Beg. balance

44,500

Depreciation

12,000

Disposals

5,500

End. Balance

51,000

Cash provided by disposal of equipment

In addition, Trevis's income statement reported a loss on the sale of equipment as follows:

Reported as an operating activity

Loss on disposal of equipment

$ 1,500

Reported as an investing activity

Reported as a financing activity