Mercury Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $150,000 was sold for its book value in Year 2.The following selected information is available for Mercury Company from its comparative balance sheet.Compute the cash received from the sale of the equipment.
A)$32,000.
B)$68,000.
C)$38,000.
D)$40,000.
E)$36,000.

Question

Mercury Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $150,000 was sold for its book value in Year 2.The following selected information is available for Mercury Company from its comparative balance sheet.Compute the cash received from the sale of the equipment. 
A)$32,000. 
B)$68,000. 
C)$38,000. 
D)$40,000. 
E)$36,000.

Quizplus · Accepted Answer

The book value of the equipment is not given but since it was sold for its book value, we can assume that the cash received from the sale of the equipment is equal to its book value. Therefore, the cash received from the sale of the equipment is $150,000. Depreciation expense for the year does not affect the cash received from the sale of equipment.

Mercury Company Reports Depreciation Expense of $40,000 for Year 2