Emerald Co.owned equipment with a book value of $72,000 that was sold during this accounting period for $18,300 in cash,and purchased new equipment for cash of $88,800.Emerald Co.would record a debit of:
A)$88,800 and a credit of $18,300 to the cash account for a net cash inflow of $70,500.
B)$88,800 and a credit of $53,700 to the cash account for a net cash inflow of $35,100.
C)$18,300 and a credit of $88,800 to the cash account for a net cash outflow of $70,500.
D)$53,700 and a credit of $88,800 to the cash account for a net cash outflow of $35,100.

Question

Quizplus · Accepted Answer

Cash increased from the proceeds of the sale,so the cash account should be debited for $18,300.Cash decreased by the amount paid for the equipment purchase,so the cash account should be credited for $88,800.The net cash outflow would be $70,500 ($88,800 − $18,300).