Final answer:
The cash received from the sale of equipment was calculated to be $281,200, by accounting for the decrease in equipment cost and adjusted change in accumulated depreciation, minus the loss on sale.
Step-by-step explanation:
To compute the cash received from the sale of the equipment, we need to reconcile the change in equipment and accumulated depreciation from the balance sheets of Year 1 and Year 2 and consider the loss on sale of equipment.
First, we find the decrease in equipment cost from Year 1 to Year 2:
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- Cost of Equipment, Year 1: $814,000
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- Cost of Equipment, Year 2: $650,000
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- Decrease in Equipment Cost: $814,000 - $650,000 = $164,000
Next, we calculate the change in accumulated depreciation:
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- Accumulated Depreciation, Year 1: $540,000
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- Accumulated Depreciation, Year 2: $460,000
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- Decrease in Accumulated Depreciation: $540,000 - $460,000 = $80,000
The decrease in Accumulated Depreciation includes the depreciation expense for Year 2, so we account for this by adding back the depreciation expense to the decrease in Accumulated Depreciation:
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- Adjusted Change in Accumulated Depreciation: $80,000 + $48,000 = $128,000
The total cash from the sale of the equipment is the decrease in equipment cost plus the adjusted change in accumulated depreciation, minus the loss on sale:
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- Total cash received = Decrease in Equipment Cost + Adjusted Change in Accumulated Depreciation - Loss on Sale
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- Total cash received = $164,000 + $128,000 - $10,800
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- Total cash received = $281,200
Therefore, the cash received from the sale of the equipment was $281,200.