During Benson Company's most recent fiscal year,beginning plant assets,net of depreciation,totaled $150,000,and ending plant assets totaled $187,500.Depreciation expense of $10,500 and a loss on sale of equipment of $1,125 was reported on the income statement.The company purchased plant assets for $60,050 during the year.How much will be reported as cash received from the sale of equipment in the investing activities

Question

Quizplus · Accepted Answer

The change in net plant assets during the year can be calculated as follows:
Beginning plant assets - Depreciation + Purchases - Loss on sale = Ending plant assets
$150,000 - $10,500 + $60,050 - $1,125 = $187,500
Therefore, the proceeds from the sale of equipment can be calculated as follows:
Sale of equipment = Beginning plant assets + Purchases - Ending plant assets + Depreciation - Loss on sale
Sale of equipment = $150,000 + $60,050 - $187,500 + $10,500 - $1,125
Sale of equipment = $32,925
Thus, the amount reported as cash received from the sale of equipment in the investing activities is $10,925 (the loss on sale of equipment of $1,125 is added back to the sale amount of $32,925 as it is a non-cash expense). The correct answer is B.

During Benson Company's Most Recent Fiscal Year,beginning Plant Assets,net of Depreciation,totaled