70.2K

Verified Solution

Link Copied!

Provide full debits and credits

CASH

ACCRUAL

							OUTFLOW
11	An old factory is reopened and refurbished for 20 in cash						20	20
	and the costs qualify as an EXPENSE
	This activity must be recorded in the Income Statement.
							INFLOW
12	An old Factory is sold for 60 in cash, at a gain of 30						60	30
	The fair value and sales price was 100					100		100
	The accumulated depreciation was 40					40		30
	The original acquisition cost for the asset was 70					70		70
	The net carrying amount of the asset on the books at the time of the sale is (70-40) = 30. The sales price is 60. Therefore the gain on sale is 30.
	This GAIN must be recorded in the Income Statement.
							OUTFLOW
13	Equipment for the factory is purchased for cash, 50.						10	10
	It is an investment or asset purchase. Its deprecciation is
	considered included in the Depreciation Expense.
14	An an investment is made in a debt security
	It does NOT qualify as a Cash Equivalent. IT will be recognized on the Balance Sheet in the						OUTFLOW
	Marektable Securities Account. It is purchased for Cash.						30	30
	All Marketable Securities are "Available for Sale"

Answer & Explanation Solved by verified expert

See Answer