When preparing the financial statements for 2021, Marc Martin, CFO for Maverick Mania Inc., noticed that during the year the company sold equipment with an original cost of $ 50,000 for cash proceeds of $ 18,000. At the time of the sale, the equipment had a carrying amount of $ 20,000. Maverick Mania uses the direct method to prepare its cash flow statement. On the 2021 cash flow statement, the company should report
A) cash proceeds from investing activities, $ 20,000.
B) cash proceeds from operating activities, $ 18,000.
C) cash proceeds from investing activities, $ 18,000.
D) cash proceeds from operating activities, $ 20,000.

Question

Quizplus · Accepted Answer

The cash proceeds from the sale of equipment are reported under investing activities, and the amount is the actual cash received, which is $18,000.

When Preparing the Financial Statements for 2021, Marc Martin, CFO