Royal Plastics provides the following information about its moulding machinery: $$\begin{array} { l r }
\text { Opening balance of machinery account } & \$ 500,000 \
\text { Closing balance of machinery account } & \$ 650,000 \
\text { Depreciation expense for the year } & \$ 50,000 \
\text { Depreciation charged on machinery sold } & \$ 130,000 \
\text { Profit on sale of machinery } & \$ 20,000 \
\text { Carrying value of machinery sold } & \$ 90,000
\end{array}$$ How much cash was received from the disposal of machinery?

Question

Royal Plastics provides the following information about its moulding machinery: $$\begin{array} { l r } 
\text { Opening balance of machinery account } & \$ 500,000 \
\text { Closing balance of machinery account } & \$ 650,000 \
\text { Depreciation expense for the year } & \$ 50,000 \
\text { Depreciation charged on machinery sold } & \$ 130,000 \
\text { Profit on sale of machinery } & \$ 20,000 \
\text { Carrying value of machinery sold } & \$ 90,000
\end{array}$$ How much cash was received from the disposal of machinery?

Quizplus · Accepted Answer

The cash received from the disposal of machinery can be calculated by adding the profit on sale of machinery to the carrying value of the machinery sold. The carrying value of the machinery sold is $90,000, and the profit on sale is $20,000. Therefore, the cash received is $90,000 + $20,000 = $110,000.

Royal Plastics Provides the Following Information About Its Moulding Machinery