Changes in the Balance Sheet Accounts at June 30, 2014

question 69

Multiple Choice

Changes in the balance sheet accounts at June 30, 2014 and 2015 for the Poker Company are presented below:
$\begin{array}{lr}\text { Assets } & \begin{array}{r}\text { Increase } \\\text { (Decrease }\end{array} \\\text { Cash } & \$ 80,000 \\\text { Accounts receivable } & 200,000 \\\text { Lnventory } & 300,000 \\\text { Long-term investments } & 200,000 \\\text { Equipment } & (200,000 \\\text { Accumulated depreciation } & (60,000) \\\\\text { Liabilities and Stockholders' Equity }\\\text {Accounts payable }&\$(40,000) \\\text {Dividends payable}&400,000\\\text {Notes payable-Current }&(200,000) \\\text {Notes payable-Long-term }&400,000\\\text {Common stock, \( \$ 1.00 \) par }&300,000\\\text {Additional paid-in capital }&100,000\\\text {Retained eamings }&80,000\\\end{array}$
Additional Information for 2015:
Net income was $480,000 and dividends of $400,000 were declared.
Common stock was issued for cash.
A Long-term investment was sold for $160,000.
A new Long-term investment was acquired for $360,000.
Equipment that cost $600,000 was sold for $200,000. The book value of those assets was $150,000.
-The gain on the sale of equipment for 2015 is

• A)$50,000.
• B)$70,000.
• C)$100,000.
• D)$150,000.

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Definitions:

Investment Center

A business segment whose manager has control over cost, revenue, and investments in operating assets.

Cost Center

A department or segment of a business to which costs can be allocated but does not directly generate revenue.

Profit Center

A segment or department within an organization that is directly responsible for generating profit, measured by its performance.

Selling Division

A segment of a company focused on the sales and distribution of products or services.