Jeffreys Company Reports Depreciation Expense of $40,000 for Year 2

question 9

Multiple Choice

Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.
$\begin{array}{|l|l|l|}\hline \text { At December 31 } &{\text { Y ear 2 }} & \text { Y ear 1 } \\\hline \text { Equipment } & \$ 510,000 & \$ 750,000 \\\hline \text { Accumulated Depreciation-Equipment } & 328,000 & 500,000\\\hline \end{array}$

• A)$62,000.
• B)$58,000.
• C)$18,000.
• D)$38,000.
• E)$28,000.

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Definitions:

Financial Basis

The underlying value or criteria used for accounting or financial management purposes, often referred to as the method of recognizing revenues and expenses.

Production Process

The method or series of actions taken to manufacture a product, from the acquisition of raw materials to the final product.

Present Value

Today's value of a future money amount or sequence of cash flows, determined by a certain rate of return.