Xi Co provides you with the following information about its equipment account: $\begin{array}{ll}
\text { Opening balance of equipment }&\$300,000\
\text {Closing balance of equipment }&\$550,000
\end{array}$
If machinery that originally cost $100 000 was sold during the year, what was the value of new equipment purchased?
A)$250 000
B)$350 000
C)$550 000
D)$150 000

Question

Xi Co provides you with the following information about its equipment account: $\begin{array}{ll}
\text { Opening balance of equipment }&\$300,000\
\text {Closing balance of equipment }&\$550,000
\end{array}$
 If machinery that originally cost $100 000 was sold during the year, what was the value of new equipment purchased?
A)$250 000
B)$350 000
C)$550 000
D)$150 000

Quizplus · Accepted Answer

The increase in the equipment account is $250,000 ($550,000 - $300,000). Since machinery costing $100,000 was sold, the new equipment purchased must be $350,000 ($250,000 increase + $100,000 sold).