The Following Selected Information Is From Mooney Company
The Following Selected Information Is From Mooney Companys Comparativ
The following selected information is from Mooney Company’s comparative balance sheets. At December, furniture was valued at 155,000 with accumulated depreciation of 74,400. During the year, depreciation expense was reported as 36,000. Furniture costing 105,000 was sold for its book value. The task is to compute the cash received from the sale of furniture.
Paper For Above instruction
To determine the cash received from the sale of furniture, we need to analyze the impact of the sale on the furniture account, accumulated depreciation, and the cash flow involved.
First, recognize that the furniture was sold for its book value, which means the sale price equals the net book value of the furniture at the time of sale. The book value of furniture is calculated by subtracting accumulated depreciation from the original cost:
Book value = Cost of furniture - Accumulated depreciation
Initially, the furniture's cost is given as 155,000. The accumulated depreciation is given as 74,400. Since part of the furniture was sold, we need to find the book value of the furniture sold.
The sale involved furniture costing 105,000. At the time of sale, the accumulated depreciation associated with that specific furniture would have been part of the total accumulated depreciation. Assuming the sale was of furniture with a cost of 105,000, the associated depreciation would be proportional or could be directly calculated, but since the problem states the furniture was sold for its book value, the calculation simplifies.
Given that the furniture was sold for its book value, the sale proceeds equal:
Sale proceeds = Cost of furniture sold - Accumulated depreciation associated with that furniture
However, without specific depreciation associated with the furniture sold, we rely on the given details to find the remaining furniture's book value after the sale and use that to find the sale proceeds.
From the balance sheet, initial furniture was 155,000 with 74,400 accumulated depreciation. During the period, depreciation expense was 36,000, which increases accumulated depreciation unless some furniture was disposed of. The sale of furniture for its book value would also impact the balance sheet by reducing furniture and accumulated depreciation accordingly.
Considering the total furniture after sale: initial furniture minus sold furniture (155,000 - 105,000 = 50,000). The remaining furniture has depreciated, and the total accumulated depreciation adjusts accordingly. Because the book value of furniture sold is 105,000, and it was sold at book value, the cash received equals that book value.
Therefore, the cash received from the sale of furniture is 105,000.
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