Belvedere Corporation had a balance in its Equipment account on January 1, Year 2 of $340,400. During the year, equipment originally costing $92,700 and having Accumulated Depreciation of $24,200 was sold for $70,500. The ending balance of the Equipment Account was $302,900. How much did the company spend to purchase additional equipment during Year 2?

Question

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The company sold equipment with a book value of $68,500 ($92,700 - $24,200) for $70,500, resulting in a gain of $2,000. The ending balance of the Equipment account was $302,900, which is $38,500 ($340,400 - $302,900) less than the beginning balance. Therefore, the company must have purchased $40,500 ($38,500 + $2,000) of additional equipment during the year.

Belvedere Corporation Had a Balance in Its Equipment Account on January