The Accounting Records of Dominick Inc

Multiple Choice

The accounting records of Dominick Inc.indicate that the firm sold for $1,800 during Year 2 a machine originally costing $6,000, with accumulated depreciation of $4,600.The journal entry made to record this sale was as follows:
Cash ........................................1,800
Accumulated Depreciation.......................4,600
Equipment..........................................6,000
Gain on Disposal of Equipment...........................400

(Use the information about Dominick Inc.to answer this question.) In preparing the statement of cash flows using the T-account worksheet, the accountant

A) subtracts the $400 gain from net income in computing cash flow investment activities.
B) adds the $400 gain to net income in computing cash flow from investment activities.
C) subtracts the $400 gain from net income in computing cash flow from operations.
D) adds the $400 gain to net income in computing cash flow from operations.
E) adds the $400 gain to retained earnings in computing cash flow investment activities.