Harris Company had the following excerpt from its financial records: 12 31/2016

Question

Harris Company had the following excerpt from its financial records: 12 31/2016 12/312017 $943,000S873,000 Equipment Accumulated Depreciation 597,000 619,000 S 324,000 The following information is taken from Harris Company's records: 1. Depreciation expense for 2017 and 2016 was $57,000 and $61,000, respectively. 2. Equipment was purchased during 2017 for $123,000 cash. 3. A gain on sale of equipment of S8,000 was recorded during 2017 Required Compute the cash proceeds from the sale of the equipment during 2017 Cash from the sale of the equipment: Clear SD Undo He Next>>

Explanation / Answer

first let us calculate the accumulated depreciation on machine sold off:

accumulated depreciation on 2016 + 2017 depreciation expense - 2017 accumulated depreciation:

=>597,000 + 57,000 - 619,000

=>$35,000.....(this is the accumulated depreciation on equipment sold off).

book value of equipment sold off = equipment balance on 2016 + new equipment purchased - equipment balance on 2017.

=>873,000 + 123,000 - 943,000

=>$53,000.........(cost of equipment sold off).

now,

the following is the calculation of cash proceeds from sale of equipment:

cost of equipment sold off $53,000 less: accumulated depreciaton (35,000) add: gain on sale of equipment 8,000 cash proceeds from sale of equipment $26,000

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