 to it. Equipment is going to be a credit for how much we bought it for, which was 51,000. So that's going off the books. We're now selling it. And then we have to get rid of the accumulated depreciation related to the equipment. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. So remember the equipment was on there at cost at 51. And then we had depreciated it over time. So that's how much it went down over time that related depreciation, which is a contra asset account has a credit balance. We need to make it go down. So we're going to debit accumulated depreciation. And again, in real life, we would see this journal entry because it would be in our records. And it would be 22850. And then we're going to have a difference. In this case, the debits are now adding up to the 489 and the credits are winning. Therefore, we're going to need another debit. What will that debit be? If we highlight all of these, it's going to be the 2001. I'm going to use our plug formula to do that the plug formula being negative SUM of these cells. And that will be the 21. So now if I highlight the debits, add up to 51, the credit 51, add up all of them, adds up to zero, debits equal the credits, what will that be? Well, it's a loss because we sold it for 26. It had a book value of 28. We lost 2001 on the sale. So it's going to be a loss on sale. So that's our journal entry. Now we're going to think about, well, how can that journal entry help us for our cash flow statement over here? I mean, what are we going to do with that? We know that, one, we know that the depreciation has to change. So we know that we're going to affect depreciation. And what's going to happen to depreciation? Well, that's going to have to be this affected by this 228. So we're going to say that this is going to be equal that 228. Depreciation has to go up by that. We already know that because that's the amount that's on the income statement. So I know that depreciation needs to go up by the 228. That's what started this whole thing. And so that brings it up to 386. Does that tie out to the income statement? That ties out to the income statement. But of course, it throws off all the rest of our numbers here. So now we're out of balance. So now we're going to have to figure out what else is going to be affected on this in order to allow us to basically adjust depreciation to what it needs to be. So what I'm going to do is I'm going to highlight these as we go. We found a home for this piece of the journal entry and let's see if we could find a home for the rest of the piece of the journal entry. We have cash affected over here. We received cash and we're going to ask ourselves, well, is that going to be what type of activity is that going to be? And the answer to that is we received cash for the sale of the equipment. And we know that the equipment, just like when we paid for the equipment, is going to be conveniently in this blue spot that we left for the cash flows from investing activities. So this is going to be an investment that we sold. Therefore, we're going to have an increase in cash from investing activities. So we're going to have a received cash received from sale of equipment. We're going to put it right there. I'm going to copy that. And I'm going to put that into kind of our balancing statement over here. I'm going to right click and paste that one, two, three. And so we're finding a home for this journal entry and in our cash flow statement basically. And so this is going to equal this cash debit. We're going to find a home for this. I want to make that green. And we're going to put that over here in our investing. We received cash from this investment. We're down here in H16 equals, we're going to point to that. I'm sorry. I'm going to put it in the adjusting column, not in that coming to say this equals and point to that 2650. And there we have this. So again, if we look down here, we're still in balance here. We're not in balance yet over here. We're going to find a home for those other two areas. So then we have the equipment. So let's take a look at the equipment 51. Where are we going to put the equipment on our cash flow statement? We know that the equipment is on the balance sheet. And we looked at the difference between the equipment. So here's the difference. Where did we put that on our cash flow statement? We can see it's right here. Now, when we think about, okay, well, what happened? We're assuming we assumed that cash was paid for the purchase of equipment because equipment went up as a whole. Now, obviously, again, I'm realizing we would look at the general ledger and say, well, what other activities in there, but other than it went up, we're assuming by just one purchase, but more purchases could be in there. And included within that area is not just the purchase, but this sale. So we sold something. And we also purchase something for more than this. So this this cash paid for equipment. It should be higher. We paid for something. If we look at the G, if we look at the GL, we're going to see that there's something that we that we purchased that was more than that. And then it went down by this number. And if we look at our information over here, we might be able to see if they give us some more information on that. So we sold the equipment. We purchased equipment. And here it is, we purchased equipment for 113.250. So that that purchase needs to be 115.250 if we pay cash for it. And it says we did, we paid all cash for it. So that means that this number needs to needs to go up in the negative direction. It needs to be a bigger decrease. And therefore, we're going to go over that's where we're going to post this item. So this equipment account, we are going to post here, we're going to call it cash paid for the purchase of equipment, that's going to be this, this negative number. And I'm going to put that on our flow statement in the adjusting section. We're going to put it right here. And I'm going to say this equals that 51. And that makes this a little too large for my sales. Okay, so that that means that this is going up to 113. And if we look over here, we're going to say that that now matches our data down here, saying it's the 113 cost of that equipment. Okay, so we have that now we just have one more piece, we're still out of balance by the 2001. So that, of course, is the gain or loss. So gain gain or loss in our journal entry, where does that go on our financial statement? And remember that the loss when we recorded the loss, it was included in net income. However, we don't want to put that information in there any cash related to the the investing activities or any cash related to the equipment should be in the investing activities. Therefore, the loss brought down net income. And we don't want to have it on the operating activities in the net income area. Therefore, we're going to pull it back out. So that's where this is going to go. And that's this convenient little spot right there. That's where it's going to go. And we're going to call that loss on sale. And that's where that last item is going to go. That's where basically the debit is. In this case, we're going to increase the net income because that loss brought down net income, we're going to bring it back up. So we're going to copy that, going to put that right here, paste it 123. And that's going to be from this number. Now note that that process, if we did that process on the go, and we didn't check that we were in balance and whatnot, we could easily throw ourselves out of balance, trying to figure out, you know, that type of process. But in this case, we can now see that the appreciation now matches. So we're okay. So I'm going to take this, I'm going to unhighlight it. I'm going to make this blue again. It was blue, right? Let's move down to our next yellow account here. So we can now see that we went to the cash paid for the purchase of equipment. Note, we already adjusted that, meaning we adjusted that for basically the cost of the equipment now based on the adjustment that we just had. Now we're going to go back and see if we financed part of that. We bought equipment for 113.250. That's true. Now we just need to see if that was financed or not. We might have a loan out on that. So we want to look at that journal entry and see if we paid all cash for that or if some of that was financed. Again, we would probably look at the general ledger in real life here. We're going to look at our set of data that they generally give us and these types of problems. So we purchased equipment for in this case, the cost of 313.250. But we only paid 43.250 of cash. So when we think about a cash flow statement, we paid 43.250. The rest is part of that long-term note. So we have a long-term note of the 70,000. So we're going to need to put that information into our flow statement in some way. I'm going to think about the journal entry first and then think about where they should go. When we purchased the equipment then, in this case, we bought more equipment. And of course, the equipment went on the books. Well, we could think about cash. Is cash affected? Yeah, cash is affected. We're going to credit cash. And that's going to be for the 43.250. What did we buy? We bought equipment. So the equipment is an asset. It's going to go up with a debit. And it must have gone up with 113.250. Note that again, this already happened. This is in the books that we would see this journal entry in our books. And then the difference is going to be a long-term notes payable. This is the part we financed. That's going to be the plug negative sum. We financed the 70,000. So now we've got to think about, well, how are we going to make our adjustments in order to fix our accounts over here? We know that this account down here, this number needs to go down to what we actually paid, which was this 43.250. So we're going to have cash paid for purchase of equipment. It's going to be the 70,000. You can think of that as basically the net of these two adding up to the 70,000. And that is going to adjust this number here, this 113.250. So remember, we started at the 62.250. We adjusted it by 51. We are now going to adjust it by that 70. This was the purchase price, but we didn't pay that in cash. So I'm going to double click on that, go to the end of it, plus put that 70 in it, and that will bring it down to the 43.250. That's how much cash we actually paid for this transaction. And then the other side of it is going to go to the note. So there's something that happened with the note and note note down here that where did we put the note, the difference within the note, we put it down here cash borrowed on long-term note. If you take a look at what happened to a long-term note, which is the other account we selected, then it's going to go right here. We had it go from 77.5 up to the 100. So we assumed that there was more cash borrowed. But in reality, this transaction is included in here as well. So we're going to have to change this description to cash paid on long-term note. And we're going to enter this information, this other half of the transaction into here, and then we'll revisit this account after this transaction. So I'm going to copy this. This is going to basically be our other side of our transaction. And we're going to say that's a negative of the 70. So we're going to have to record the other half. And I'm going to put that right here. We're going to say this is equal to the 70. And that will put us back in balance over here. So now we've basically fixed this account. We've gone through. We've seen, okay, the cash paid to purchase equipment is actually 43.250. We've now adjusted that. We've done it kind of systematically so that we can be back in balance here. And notice if we do this process and we have to ask someone, you know, I'm kind of stuck in this process, we could say, hey, I'm stuck on this process. I'm in balance stuck in this process. I see the journal entry. You know, where do we go from here? We could be as specific as possible when we're working through this stuff. Okay, so we have one more account here. Let's just verify these and take a look at our last bit of data. We've got 47.5 in the cash paid for the long term note. Let's see if we can kind of verify that information and then go through any other data that the problem might give us to see if there's any other things that we have missed here. So we have the sold equipment. So we have taken that journal entry into consideration. We have the purchase here, purchased equipment. We have taken a look at that. We had the borrowed short term loan from the bank. So if we verify that the short term loan that we borrowed 5,000 from the bank for cash. So there's that 5,000 that looks correct here. Then we see the next piece of information they give us is paid to reduce the long term debt. So we paid cash to reduce the long term debt. So that should be on the cash flow statement in financing. So so here's cash paid on long term debt that 47.5. So it does look like that is the correct number. So therefore, we've verified this item. So we're going to say that's our last yellow item. It looks like it's correct according to the added information that we have here. 47.5 declared dividends of 53.6. That's the dividends that we paid. So we should have 53.6 in the financing activities. And we look down here with the 53.6 in the financing activities. So now this is basically our ending number that the 123.450 now ties out to the ending part of the cash 123.450. That's what would be on the balance sheet. And if I hide these two columns, we're going to put my cursor on I highlight. I'm putting my cursor on sorry, H. I'm going to highlight to J. Then let go right click and hide. Then this is basically our cash flow. So this is our adjusted cash flow statement. Our ending numbers. We have the net income here. We've got cash flow from operating activities, cash flows from investing activities, cash flows from financing activities. This would be the change in cash. And we have the beginning cash. And then this will be the ending cash on the year.