Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulateddepreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the followingtransactions is Bravo supposed to record?Select the single best answer:A debit Cash $45,000 credit Equipment/Furnace $45,000B. debit Cash $40,000, debit Equipment/Furnace $40,000C credit Gain on Disposition of Equipment/Furnace $45,000, debit Cash $45,000D. debit Equipment/Furnace $5,000 credit Equipment/Furnace $40.000, debit Cash $45,000E credit Gain on Disposition of Equipment/Furnace $5,000 credit Equipment/Furnace $40,000; debit Cash $45.000

The correct answer is: (E) credit Gain on Disposition of Equipment/Furnace $5.000: credit…

Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following transactions is Bravo supposed to record?

Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following transactions is Bravo supposed to record?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated
depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following
transactions is Bravo supposed to record?
Select the single best answer:
A debit Cash $45,000 credit Equipment/Furnace $45,000
B. debit Cash $40,000, debit Equipment/Furnace $40,000
C credit Gain on Disposition of Equipment/Furnace $45,000, debit Cash $45,000
D. debit Equipment/Furnace $5,000 credit Equipment/Furnace $40.000, debit Cash $45,000
E credit Gain on Disposition of Equipment/Furnace $5,000 credit Equipment/Furnace $40,000; debit Cash $45.000

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