Farmer Company sold a piece of equipment for $6,000.The equipment had an original cost of $34,000 and accumulated depreciation of $31,000 at the time of the sale.Which of the following correctly shows the effect of the sale on the elements of the financial statements?

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The sale increases assets (cash)by $6,000,decreases assets (equipment)by $34,000,and increases assets (by decreasing accumulated depreciation,a contra asset account)by $31,000,resulting in a net increase in assets of $3,000.Because the selling price of $6,000 is greater than the equipment's book value of $3,000 (or $34,000 - $31,000),Farmer reports a gain on the sale of $3,000,which increases revenue,net income,and stockholders' equity (retained earnings).The $6,000 cash proceeds are reported as a cash inflow for investing activities.

Farmer Company Sold a Piece of Equipment for $6,000