Sherman Co

Short Answer

Sherman Co. owned equipment that originally cost $24,000. The company sold the equipment on January 1, 2013 for $8,000 cash. Accumulated depreciation on the day of sale amounted to $17,000. Based on this information, indicate whether each of the following statements is true or false.
_____ a) The sale will decrease Sherman's net income, but it will not affect the company's operating income.
_____ b) Sherman would show an $8,000 cash inflow in the operating activities section of the cash flow statement.
_____ c) The sale would result in a decrease in total assets.
_____ d) The sale would increase Sherman's equity by $1,000.
_____ e) The sale would be recorded as a debit to cash for $8,000, a credit to equipment for $7,000, and a credit to gain on sale of equipment for $1,000.