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aniked [119]
3 years ago
11

Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 los

s in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $510,000 $750,000 Accumulated Depreciation-Equipment 328,000 500,000 A. $18,000. B. $28,000. C. $62,000. D. $58,000. E. $38,000.
Business
1 answer:
Daniel [21]3 years ago
7 0

Answer:

Computation of cash received from the sale of the equipment:

D. $58,000.

Explanation:

Computation:

Sale of Equipment Account

Equipment account   $240,000

less acc. depreciation  172,000

Net book value           $68,000

less loss on sale            10,000

Cash received            $58,000

Equipment Account

Year 1 balance         $750,000

Year 2 balance           510,000

Sale of equipment  $240,000

Accumulated Depreciation:

Year 1 balance         $500,000

Year 2 balance          328,000

Sale of equipment   $172,000

b) The sale of the equipment caused a loss of $10,000.  The net book value of the equipment is $68,000.  This implies that it was sold for $58,000 ($68,000 - $10,000).  So, the cash received from the sale is $58,000.

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