A company reported beginning plant assets,net of depreciation,of $655,000;and,an ending amount of $732,550.Depreciation expense of $48,400 and a loss on the sale of equipment of $5,500 were reported on the income statement.The company acquired $213,800 of plant assets during the year.How much will be reported as cash received from the sale of equipment in the investing activities section of the statement of cash flows?

Question

Quizplus · Accepted Answer

To determine the cash received from the sale of equipment, we need to use the following formula:

Cash received from the sale of equipment = Book value of equipment sold + Loss on sale of equipment - Gain on sale of equipment

Since there is no information on whether there was a gain or loss on the sale of equipment, we can assume that there was only a loss of $5,500.

The book value of the equipment sold can be determined by taking the beginning plant assets, adding any new acquisitions, and subtracting the ending plant assets and depreciation expense.

Book value of equipment sold = Beginning plant assets + New acquisitions - Ending plant assets - Depreciation expense 
Book value of equipment sold = $655,000 + $213,800 - $732,550 - $48,400 
Book value of equipment sold = $88,850

Cash received from the sale of equipment = $88,850 - $5,500 
Cash received from the sale of equipment = $83,350

Therefore, the correct answer is B) The cash received upon the sale of the equipment was $82,350.

A Company Reported Beginning Plant Assets,net of Depreciation,of $655,000;and,an Ending