At the end of 2018,Schenck Corporation sold its only piece of equipment for $9,000 cash,a price that resulted in a loss of $3,000.During 2018,depreciation expense recognized by Schenck was $1,000.Schenck uses the indirect method to compute net cash flow from operating activities.In reconciling net income to net cash flow from operating activities under the indirect method,the required adjustments based upon the given data:
A)Increase net income by $4,000.
B)Increase net income by $1,000.
C)Decrease net income by $4,000.
D)Increase net income by $3,000.

Question

Quizplus · Accepted Answer

The loss on the sale of equipment ($3,000) and the depreciation expense ($1,000) both need to be added back to net income when using the indirect method to compute net cash flow from operating activities, totaling an increase of $4,000.

At the End of 2018,Schenck Corporation Sold Its Only Piece