A machine with a book value of $38,000 is sold for $32,000 cash. Which of the following answers would accurately represent the effects of the sale on the financial statements?
Balance Sheet Income Statement Statement of Cash Flows
Assets = Liabilities + Stockholders’ Equity Revenue/Gain Expense/Loss = Net Income
A. 38,000 = n/a + 38,000 38,000 n/a = 38,000 38,000 I/A
B. (6,000) = n/a + (6,000) n/a 6,000 = (6,000) 6,000 OA
C. (6,000) = n/a + (6,000) n/a 6,000 = (6,000) 6,000 IA
D. (6,000) = n/a + (6,000) n/a 6,000 = (6,000) 32,000 IA
Multiple Choice
Option A
Option B
Option D
Option C