Equipment with an original cost of $60,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would
A) increase by $33,000
B) decrease by $7,000
C) increase by $40,000
D) decrease by $27,000

Question

Quizplus · Accepted Answer

The book value of the equipment is $40,000 ($60,000 original cost - $20,000 accumulated depreciation). Since it was sold at a loss of $7,000, the cash received must have been $33,000 ($40,000 book value - $7,000 loss).

Equipment with an Original Cost of $60,000 and Accumulated Depreciation