The following entry was recorded by Williams Inc.: $$\begin{array} { | l | r | r | }
\hline \text { Cash } & 57,000 & \
\hline \text { Accumulated depreciation } & 33,000 & \
\hline \text { Loss on disposal of property, plant, and } & 10,000 & \
\text { equipment (PPE) } & & \
\hline \text { PPE } & & 100,000 \
\hline
\end{array}$$ What is the effect of this entry on the financial statements?

Question

The following entry was recorded by Williams Inc.: $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 57,000 & \
\hline \text { Accumulated depreciation } & 33,000 & \
\hline \text { Loss on disposal of property, plant, and } & 10,000 & \
\text { equipment (PPE) } & & \
\hline \text { PPE } & & 100,000 \
\hline
\end{array}$$ What is the effect of this entry on the financial statements?

Quizplus · Accepted Answer

The entry shows that Williams Inc. disposed of property, plant, and equipment (PPE) with a book value of $67,000 ($100,000 PPE less $33,000 accumulated depreciation), resulting in a loss of $10,000 and an increase in cash of $57,000. This means current assets (cash) increased by $57,000. The other options are incorrect interpretations of the transaction's impact on the financial statements.

The Following Entry Was Recorded by Williams Inc What Is the Effect of This Entry on the Financial