Question

Mercury Company reports depreciation expense of $53,000 for Year 2. Also, equipment costing $180,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Mercury Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $ 675,000 $ 855,000 Accumulated Depreciation-Equipment 480,000 565,000

Answer 1

Answer:

The cash received from the sale of the equipment i s $42,000

Explanation:

For computing the cash received, first, we have to find the balance of accumulated depreciation which is computed below:

Accumulated depreciation = Beginning balance of accumulated depreciation + depreciation expense - ending balance of accumulated depreciation

= $565,000 + $53,000 - $480,000

= $138,000

Now subtract this amount from the sale value of the equipment.

So, the value is equal to

= $180,000  - $138,000

= $42,000