Equipment with an original cost of $20,000 and accumulated depreciation of $7,500 was sold at a loss of $2,500.As a result of this transaction,cash would:
A) increase by $10,000.
B) decrease by $7,500.
C) increase by $20,000.
D) decrease by $10,000.

Question

Quizplus · Accepted Answer

The equipment's book value is calculated as the original cost ($20,000) minus accumulated depreciation ($7,500), which equals $12,500. Selling it at a loss of $2,500 means the selling price was $10,000 ($12,500 book value - $2,500 loss), which increases cash by $10,000.

Equipment with an Original Cost of $20,000 and Accumulated Depreciation