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Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is...

Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,270, and the accumulated depreciation on these fixtures is $6,781 at the time of sale. The fixtures are sold for $4,312. The value of this transaction in the investing section of the statement of cash flows is

a.$4,312

b.$12,270

c.$6,781

d.$14,739

Baxter Company reported a net loss of $15,378 for the year ended December 31. During the year, accounts receivable decreased by $5,232, merchandise inventory increased by $11,837, accounts payable increased by $8,623, and depreciation expense of $4,626 was recorded. During the year, operating activities under the indirect method

a.provided net cash of $8,734

b.used net cash of $15,378

c.used net cash of $8,734

d.provided net cash of $15,378

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Answer #1

Question 1

Correct answer---------a.$4,312

Cash received on sale will be reported as a cash inflow in investing section of cash flow. The loss or gain on sale of noncurrent asset is reported in operating section as an adjustment to net income.

Question 2

Correct answer---------c.used net cash of $8,734

Working

Cash Flows from Operating Activity
Net Income $    (15,378.00)
Adjustments to reconcile net income to  
net cash flow from operating activities:
Depreciation expense $       4,626.00
Changes in current operating assets and liabilities:
Decrease in Accounts receivables $       5,232.00
Increase in Inventory $   (11,837.00)
Increase in accounts payable $       8,623.00
$        6,644.00
Net cash flow from Operating activities $      (8,734.00)
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