138.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.
139.The Rollins Company purchased a delivery van on January 1, 2013 for $30,000. Rollins uses straight-line depreciation for the asset, which has a five year estimated useful life and a salvage value estimated at $6,000. The asset was sold on January 1, 2015 for $22,000 cash. Indicate whether each of the following items related to Rollins Company is true or false.
_____ a) Annual depreciation for Rollins' equipment was $6,000.
_____ b) Accumulated depreciation on January 1, 2015 was $9,600.
_____ c) Book value on January 1, 2015 was $20,400.
_____ d) On the date of the sale, Rollins will record a loss of $1,600.
_____ e) A gain or loss on the sale of a plant asset is reported on the balance sheet.