Question

Green Company reports depreciation expense of $46,000 for Year 2. Also, equipment costing $158,000 was sold for a $5,600 gain in Year 2. The following selected information is available for Green Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

At December 31 Year 2 Year 1
Equipment $640,000 $798,000
Accumulated Depreciation-Equipment 452,000 530,000

a. $41,800.
b. $36,000.
c. $30,200.
d. $48,000.
e. $84,000.

Answer 1

Answer:

$39,600

Explanation:

Depreciation on sold equipment:

Accumulated depreciation in Year -1 = $530,000

Depreciation for the year 2 = $46,000

Accumulated depreciation to be in year 2 = $530,000 + $46,000

                                                                      = $576,000

But , reported accumulated depreciation in year 2 = $452,000

Thus, Depreciation on sold Equipment:

= Accumulated depreciation to be in year 2 - reported accumulated depreciation in year 2

= $576,000 - $452,000

= $124,000

Written dawn value = Cost - Depreciation

                                 = $158,000 - $124,000

                                 = $34,000

Sale Price = Written dawn value + Gain on sale of equipment

                 = $34,000 + $5,600

                 = $39,600