Response to the following problem:
Assume the following income statement information:
|
Service revenue (all cash) Operating expenses Rent
|
|
$235
|
|
Amortization of patents
|
$ 50
|
|
|
Salaries
|
20
|
|
|
|
100
|
170
|
|
Income from operations
|
|
65
|
|
Other item : Loss on sale of land
|
|
18
|
|
Net income
|
|
$ 47
|
Assume that rent and salaries expenses are all paid in cash.
Required:
1. Prepare the journal entry to record the amortization of leasehold improvements. What is the cash effect of this entry?
2. Assume that the land was recorded at its original cost of $32 on the balance sheet at the disposal date and was sold for $14. Prepare the journal entry to record the disposal. What is the cash effect of this entry?
3. Calculate the cash flow from operating activities.