Question

QS 12-8 Computing cash from asset sales LO P3 The following information is from Ellerby Company’s comparative balance sheets. At December 31 Current Year Prior Year Furniture $ 150,000 $ 208,500 Accumulated depreciation—Furniture (94,700 ) (116,700 ) The current year income statement reports depreciation expense on furniture of $24,000. During the year, furniture costing $58,500 was sold for its book value on December 31, Current Year. Complete the general ledger accounts to calculate cash received from the sale of furniture.

Answer 1

Answer:

$12,500

Explanation:

As provided:

Net opening balance of furniture = $208,500 - $116,700 = $91,800

Net closing value of furniture = $150,000 - $94,700 = $55,300

Depreciation expense for the year = $24,000

Opening balance of depreciation + Current year - Written off = Closing balance

= 116,700 + 24,000 - Written off = $94,700 = $46,000

The cost of the asset sold = $58,500

Depreciation written off for the year is charged on this asset only = $58,500 - $46,000 = Selling value = Cash received = $12,500