Question

Here are current-year data regarding Sparrow Company’s delivery trucks:

January 1 December 31

Delivery trucks $180,000 $163,000

Accumulated depreciation (33,000) (31,000)

Net book value $147,000 $132,000

During the current year, Sparrow acquired a new truck at a cost of $37,000, reported $18,000 of depreciation expense related to all its trucks, and reported a $19,000 gain on the sale of an old truck. How much cash did Sparrow receive from the sale of the old truck? _____________

Answer 1

• Correct Answer = $ 53,000

A	Accumulated Depreciation - Beginning	$33,000
B	Depreciation Expense	$18,000
C	Accumulated Depreciation - Ending	$31,000
D = A+B-C	Depreciation amount for Truck sold	$20,000
E	Truck - Beginning	$180,000
F	Truck purchased	$37,000
G	Truck - Ending	$163,000
H = E+F-G	Truck sold - Cost	$54,000
I = H - D	Book Value of truck sold	$34,000
J	Gain on sale of truck	$19,000
K = I + J	Cash received from sale of old truck	$53,000	Answer