In 2019, BayKing Company Sold Used Equipment for $17,000

question 76

Essay

In 2019, BayKing Company sold used equipment for $17,000. The equipment had an original cost of $80,000 and accumulated depreciation as of the date of sale was $60,000. BayKing also purchased held-to-maturity securities for $7,000. Net income for the year was $75,000. There were no other transactions conducted during the period.
1. What is the gain or loss on the sale of the equipment?
2. What are the 2019 net operating cash flows for BayKing?
3. What are the 2019 net investing cash flows for BayKing?

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Definitions:

Transfer Price

The price at which divisions of a company transact with each other, such as the sale of goods or services, often used for internal accounting.

Upstream Division

A segment within a company that focuses on the initial stages of production or the supply chain, such as raw materials acquisition.

Downstream Division

The section of a company involved with the processing, marketing, and sale of products derived from raw materials.

Profit Centers

Segments within a business that are directly responsible for generating profits through their activities and performance.