Final answer:
The cash received from the sale of the machinery was $66,000, found by calculating the book value on the date of the sale and adding the gain recorded on the sale.
Step-by-step explanation:
To determine the cash received from the sale of the machinery, we first need to calculate the book value of the machinery at the time of sale. The machinery had an original cost of $320,000, a salvage value of $20,000, and a useful life of 5 years. The annual depreciation using the straight-line method would be:
Annual Depreciation = (Cost - Salvage Value) / Useful Life = ($320,000 - $20,000) / 5 = $60,000 per year.
By May 1, 2014, the machinery would have been depreciated for 4 years and 4 months (or 4.33 years). The accumulated depreciation at that point is:
Accumulated Depreciation = Annual Depreciation × Years of Depreciation = $60,000 × 4.33 = $259,800.
The book value of the machinery when it was sold is:
Book Value = Original Cost - Accumulated Depreciation = $320,000 - $259,800 = $60,200.
Since the machinery was sold at a gain of $6,000, the cash received from the sale is:
Cash Received = Book Value + Gain = $60,200 + $6,000 = $66,000.
Therefore, the cash received from the sale of the machinery is $66,000, which corresponds to option C.