On September 10, 2013, Flagler Company sold a piece of equipment for $3,000. The equipment had an original cost of $17,000 and accumulated depreciation of $15,500 at the time of the sale. Which of the following correctly shows the effect of the sale on the 2013 financial statements?

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The cash account increases by $3,000, the equipment account decreases by $17,000, and the accumulated depreciation account decreases by $15,500, resulting in a net increase in assets of $1,500. Because the selling price is $1,500 greater than the equipment's book value ($17,000 - $15,500), Flagler reports a gain on the sale of $1,500, which increases revenue, net income, and equity. The $3,000 cash proceeds are reported as a cash inflow for investing activities.

On September 10, 2013, Flagler Company Sold a Piece of Equipment