Jantzi Company reported capital assets,net of accumulated depreciation,on January 1,2017,at $427,500 and $579,300 on December 31,2017.The income statement showed depreciation of $38,700.Jantzi Company acquired $275,000 of capital assets during the year and reported proceeds from the sale of capital assets of $89,200 for the year.The gain or loss resulting from the sale of capital assets was:

Question

Quizplus · Accepted Answer

The change in net capital assets from January 1, 2017, to December 31, 2017, is calculated as follows:
Net capital assets on Jan. 1, 2017 = $427,500
Depreciation reported on the income statement = $38,700
Capital assets acquired during the year = $275,000
Proceeds from the sale of capital assets = $89,200
Net capital assets on Dec. 31, 2017 = $579,300

Change in net capital assets = (427,500 + 275,000 - 89,200) - (579,300 - 38,700) = $1,700 loss

Since Jantzi Company reported proceeds from the sale of capital assets, we need to calculate the gain or loss resulting from the sale of capital assets separately. Here is the calculation:

Gain or Loss = Proceeds from the Sale of Capital Assets - Carrying Amount of Assets Sold
= $89,200 - (Net Capital Assets on Jan. 1, 2017 - Depreciation from Jan. 1, 2017, to the date of sale)
= $89,200 - ($427,500 - $38,700)
= $4,700 gain

Therefore, the correct answer is C) $4,700 gain.

Jantzi Company Reported Capital Assets,net of Accumulated Depreciation,on January 1,2017,at