During Benson Company's most recent fiscal year,beginning plant assets,net of depreciation,totaled $150,000,and ending plant assets totaled $187,500.Depreciation expense of $10,500 and a loss on sale of equipment of $1,125 was reported on the income statement.The company purchased plant assets for $60,050 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 calculate 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

The book value of equipment sold can be calculated as follows:

Book value of equipment sold = Beginning plant assets - Depreciation expense + Plant assets purchased - Ending plant assets

Book value of equipment sold = $150,000 - $10,500 + $60,050 - $187,500 = $12,050

Therefore, the cash received from the sale of equipment is:

Cash received from the sale of equipment = $12,050 - $1,125 = $10,925

So the correct answer is B.

During Benson Company's Most Recent Fiscal Year,beginning Plant Assets,net of Depreciation,totaled