Equipment with an original cost of $50,000 and accumulated depreciation of $20,000 was sold at a loss of $7,00

Question

Equipment with an original cost of $50,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would:

1. increase by $43,000

2. decrease by $30,000

3. increase by $23,000

4. decrease by $7,000

Answer 1

yeah (3).

Answer 2

Beginning Value = $50,000

Accumulated Depreciation = $20,000

That gives you a book value on the equipment of $30,000. For it to be sold at a loss of $7,000, it would have to have been sold for $23,000.

Journal Entry would look like this.

<<Cash - $23,000

<<Accumulated Depreciation - $20,000

<<Loss on sale: Equipment - $7,000

>>Equipment - $50,000

3, increased by $23,000.