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Question - Illinois Woodworking Company is preparing its statement of cash flows using the indirect method. During the year, Illinois Woodworking sold equipment for $7,990 cash. The net book value of the asset was $4,770. Which of the following statements is true?
1 The cash receipt of $7,990 is shown as a positive cash flow in the investing activities section.
2 The book value of the asset sold is shown as a negative cash flow in the investing activities section.
3 The gain on sale of $3,220 is added back to net income in the operating activities section.
4 The gain on sale of $3,220 is shown as a positive cash flow in the financing activities section.
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