Belvedere Corporation had a balance in its Equipment account on January 1,Year 1 of $320,000.During the year,equipment originally costing $85,000 and having Accumulated Depreciation of $20,000 was sold for $67,000.The ending balance of the Equipment Account was $275,000.How much did the company spend to purchase additional equipment during Year 1?
A)$40,000
B)$25,000
C)$90,000
D)$92,000

Question

Quizplus · Accepted Answer

Ending balance of equipment of $275,000 = Beginning balance of equipment of $320,000 + Increase due to purchase of equipment (the unknown)- Decrease due to cost of equipment sold of $85,000
Outflow for purchase of equipment = $275,000 - $320,000 + $85,000 = $40,000

Belvedere Corporation Had a Balance in Its Equipment Account on January