Halbur Company reported the following for its recent year of operation: $\begin{array}{lr}
\text { From the income statement: } \
\text { Depreciation expense } & \$ 1,000 \
\text { Loss on sale of equipment } & 3,000\
\text { From the comparative balance sheet: } & \
\text { Beginning balance, equipment } & \$ 12,500 \
\text { Ending balance, equipment } & 8,000 \
\text { Beginning balance, accumulated depreciation } & 2,000 \
\text { Ending balance, accumulated depreciation } & 2,400
\end{array}$ No new equipment was purchased during the year. What was the selling price of the equipment?
A) $3,900.
B) $1,000.
C)$900.
D)$600.

Question

Quizplus · Accepted Answer

The equipment's book value at the time of sale was $8,100 ($12,500 - $2,000 - $1,000). The loss on sale was $3,000, so the selling price was $8,100 - $3,000 = $5,100. The ending balance of equipment is $8,000, so the equipment sold was $4,500 ($12,500 - $8,000). Therefore, the selling price was $900 ($5,100 - $4,500).

Halbur Company Reported the Following for Its Recent Year of Operation