The following beginning and ending balances were drawn from the records of Allen Co.

If Allen Co.sold equipment that had an original cost of $175,000 and accumulated depreciation of $75,000 for $62,500,how much did Allen pay for new equipment?
A)$12,500
B)$25,000
C)$100,000
D)$250,000

Question

The following beginning and ending balances were drawn from the records of Allen Co.

If Allen Co.sold equipment that had an original cost of $175,000 and accumulated depreciation of $75,000 for $62,500,how much did Allen pay for new equipment?
A)$12,500 
B)$25,000 
C)$100,000 
D)$250,000

Quizplus · Accepted Answer

Ending balance of equipment of $275,000 = Beginning balance of equipment of $350,000 + Increase due to purchase of equipment (the unknown)- Decrease due to cost of equipment sold of $175,000
Outflow for purchase of equipment = $275,000 - $350,000 + $175,000 = $100,000

The Following Beginning and Ending Balances Were Drawn from the Records