Answer: $267,300
Explanation:
The cash received will be:
= Net book value + gain
Net book value:
Annual depreciation = (1,260,000 - 84,000) / 5 years
= $235,200 per year.
Depreciation up until January 1, 2021 = 235,200 * 4
= $940,800
Depreciation up until May 1, 2021 = 940,800 + ( (235,200 / 12 months) * 4 months )
= $1,019,200
Net book value = 1,260,000 - 1,019,200
= $240,800
Cash received = 240,800 + 26,500
= $267,300
