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An analysis of changes in selected balance sheet accounts of Hierarchy Corporation shows the following for the current year:
Hierarchy's income statement for the current year includes a $9,600 gain on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash.
-Total cash proceeds received by Hierarchy from sales of plant assets during the current year amounted to:
A)$696,000.
B)$705,600.
C)$633,600.
D)$768,000.

Question

[The following information applies to the questions displayed below.]
An analysis of changes in selected balance sheet accounts of Hierarchy Corporation shows the following for the current year:
  Hierarchy's income statement for the current year includes a $9,600 gain on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash.
-Total cash proceeds received by Hierarchy from sales of plant assets during the current year amounted to:
A)$696,000. 
B)$705,600. 
C)$633,600. 
D)$768,000.

Quizplus · Accepted Answer

To calculate the cash proceeds from sales of plant assets, we need to look at the change in the Plant Assets account, which shows a decrease of $105,600 ($1,152,000 - $1,046,400). Since all payments and proceeds related to plant assets were in cash and there was a gain of $9,600 on the disposal of plant assets, we can calculate the cash proceeds as follows:

Cash proceeds = Decrease in Plant Assets + Gain on disposal
Cash proceeds = $105,600 + $9,600
Cash proceeds = $115,200

Therefore, the total cash proceeds received by Hierarchy from sales of plant assets during the current year amounted to $705,600 (Choice B).

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