Use the information below for Soho Inc.for 2017 and 2018 to answer the following question: $\begin{array}{lr}
\text { Equipment, December } 31,2017 & \$ 65,000 \
\text { Equipment, December 31,2018 } & 72,000 \
\text { Accumulated depreciation, December 31,2017 } & 39,000 \
\text { Accumulated depreciation, December 31,2018 } & 30,000
\end{array}$During 2017,Soho Inc.sold equipment with a cost of $30,000 and accumulated depreciation of $25,000 for cash.A gain of $3,000 was recognized on the sale of the equipment.This was the only equipment sale during the year.
What amount would be reported as the cash proceeds from the sale of equipment?

A)$2,000
B)$3,000
C)$5,000
D)$8,000

Question

Use the information below for Soho Inc.for 2017 and 2018 to answer the following question: $\begin{array}{lr}
\text { Equipment, December } 31,2017 & \$ 65,000 \
\text { Equipment, December 31,2018 } & 72,000 \
\text { Accumulated depreciation, December 31,2017 } & 39,000 \
\text { Accumulated depreciation, December 31,2018 } & 30,000
\end{array}$During 2017,Soho Inc.sold equipment with a cost of $30,000 and accumulated depreciation of $25,000 for cash.A gain of $3,000 was recognized on the sale of the equipment.This was the only equipment sale during the year.
What amount would be reported as the cash proceeds from the sale of equipment?

A)$2,000
B)$3,000
C)$5,000
D)$8,000

Quizplus · Accepted Answer

The cash proceeds from the sale of equipment can be calculated by adding the gain recognized ($3,000) to the accumulated depreciation of the sold equipment ($25,000), which equals $28,000. However, since the cost of the sold equipment was $30,000, and we know the proceeds must cover both the remaining book value after depreciation and the gain, the correct calculation is the book value of the equipment at the time of sale ($30,000 cost - $25,000 accumulated depreciation = $5,000 book value) plus the gain ($3,000), totaling $8,000.

Use the Information Below for Soho Inc During 2017,Soho Inc