Question

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A comparative balance sheet and income statement is shown for Cruz, Inc.

CRUZ, INC. Comparative Balance Sheets December 31, 2017
		2017				2016
Assets
Cash	$	99,000			$	25,000
Accounts receivable, net		42,800				53,100
Inventory		89,600				99,700
Prepaid expenses		5,600				4,400
Total current assets		237,000				182,200
Furniture		113,000				124,700
Accum. depreciation—Furniture		(17,600	)			(9,400	)
Total assets	$	332,400			$	297,500
Liabilities and Equity
Accounts payable	$	15,600			$	21,900
Wages payable		9,400				5,200
Income taxes payable		1,500				2,700
Total current liabilities		26,500				29,800
Notes payable (long-term)		31,100				65,700
Total liabilities		57,600				95,500
Equity
Common stock, $5 par value		238,600				190,000
Retained earnings		36,200				12,000
Total liabilities and equity	$	332,400			$	297,500

   

CRUZ, INC. Income Statement For Year Ended December 31, 2017
Sales				$	509,400
Cost of goods sold					327,800
Gross profit					181,600
Operating expenses
Depreciation expense	$	39,200
Other expenses		92,900			132,100
Income before taxes					49,500
Income taxes expense					18,100
Net income				$	31,400

Furniture costing $57,700 is sold at its book value in 2017. Acquisitions of furniture total $46,000 cash, on which no depreciation is necessary because it is acquired at year-end. What is the cash inflow related to the sale of furniture?

Answer 1

Correct answer---------Cash inflow related to equipment = $26,700

Working

Accumulated depreciation on Furniture sold
Accumulated Depreciation beginning balance	$         9,400.00
Add: Depreciation of current year	$       39,200.00
Subtotal	$       48,600.00
Ending balance of Accumulated depreciation	$       17,600.00
Depreciation on asset sold	$       31,000.00

.

Cash received on sale of Furniture
Cost of equipment sold	$       57,700.00
Less: Accumulated depreciation	$       31,000.00
Book value of asset sold	$       26,700.00
Profit on sale	$                      -
Cash received on sale of Furniture	$       26,700.00