The following beginning and ending balances were drawn from the records of Grimes Company: If Grimes Company sold equipment, which had an original cost of $600 and accumulated depreciation of $300, for $250, how much did Grimes pay for new equipment?
$\begin{array}{|r|rr|rr|}
\hline &\text { Begining }& &\text { Ending } \
\hline \text {Equipment }&\$ & 1,400 & \$ & 1,100 \
\hline \text {Accumulated Depreciation }&\$ & 700 & \$ & 400 \
\hline
\end{array}$
A)$255
B)$300
C)$200
D)$550

Question

Quizplus · Accepted Answer

Grimes sold equipment with a book value of $300 ($600 cost - $300 accumulated depreciation) for $250, resulting in a $50 loss. The beginning equipment balance was $1,400, and after selling the equipment, it should be $800 ($1,400 - $600). The ending balance is $1,100, indicating Grimes purchased $300 worth of new equipment ($1,100 - $800).

The Following Beginning and Ending Balances Were Drawn from the Records