Question

Furniture costing $61,700 is sold at its book value in 2017. Acquisitions of furniture total $50,000 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

cash inflow = $32,100

Step-by-step explanation:

there is some information missing:

• accumulated depreciation 2016 (furniture) = $9,000
• depreciation expense 2017 (furniture) = $37,600
• accumulated depreciation 2017 (furniture) = $17,000

we must first determine the book value of the furniture which was sold:

total depreciation related to the sold furniture = $9,000 + $37,600 - $17,000 = $29,600

book value = $61,700 - $29,600 = $32,100

since the furniture was sold at book value, then the cash inflow = $32,100

Cash inflow refers to money being received or earned by the company, while cash outflows refer to money being paid by the company.