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The YXZ company’s beginning and ending Plant account balances were $1,800,000 and $2,370,000 respectively. The beginning...

The YXZ company’s beginning and ending Plant account balances were $1,800,000 and $2,370,000 respectively. The beginning and ending Accumulate Depreciation account balances were $560,000 and $615,000. Equipment was sold for $80,000. The equipment had cost $120,000 and had $40,000 of accumulated depreciation.

Please answer the following

A.) How much was the gain or loss on the sale of Equipment?

B.) How much was the Depreciation Expense?

C.) How much did the company spend on Purchases of Equipment?

Business   Accounting   
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Answer #1

A.

Cost of equipment sold = $120,000

Accumulated depreciation = $40,000

Book value of equipment = Cost of equipment sold- Accumulated depreciation

= 120,000-40,000

= $80,000

Sale price of equipment = $80,000

Since sale price is same as book value, there is no loss no gain on the sale of equipment.

B.

Accumulated Depreciation Account
Equipment 40,000 Beginning balance 560,000
Ending balance 615,000 Depreciation expense (Bal. Fig) 95,000

Depreciation expense= $95,000

C.

Equipment
Beginning balance 1,800,000 Accumulated depreciation 40,000
Cash (Purchase) (Bal. Fig) 690,000 Cash (sale) 80,000
Ending balance 2,370,000
2,490,000 2,490,000

Purchase of equipment = $690,000

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