Use this information to answer the following question. Here is the balance sheet for Costello Container Company:

-If the equipment were sold for $13,000,then the Retained Earnings account would
A)increase by $37,000.
B)increase by $13,000.
C)decrease by $13,000.
D)stay the same.

Question

Use this information to answer the following question. Here is the balance sheet for Costello Container Company:

-If the equipment were sold for $13,000,then the Retained Earnings account would
A)increase by $37,000. 
B)increase by $13,000. 
C)decrease by $13,000. 
D)stay the same.

Quizplus · Accepted Answer

The sale of equipment for its book value does not affect the Retained Earnings account, as it involves merely exchanging one asset (equipment) for another (cash), without realizing any gain or loss.

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