Albers Enterprises uses the direct method when preparing its statement of cash flows. Albers sold equipment with a book value of $51,000 at a gain of $7,000. The amount to be reported on the statement of cash flows under "proceeds from the sale of plant assets" is:
A)$44,000.
B)$ 7,000.
C)$58,000.
D)$51,000.

Question

Quizplus · Accepted Answer

The statement of cash flows using the direct method requires reporting the actual cash inflows and outflows. The proceeds from the sale of plant assets would be the cash received from the sale, which is $58,000 (($51,000 book value + $7,000 gain)). Therefore, the correct answer is option C.

Albers Enterprises Uses the Direct Method When Preparing Its Statement