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A business buys equipment costing $15,000 and sells equipment costing $1,800 in the year. The opening balance of the equipment account was $21,500. What will be the balance CARRIED DOWN to the next period?
(A) Dr $36,500
(B) Cr $36,500
(C) Cr $34,700
(D) Dr $34,700Please explain the answer too. As I am confused in ‘C’ and ‘D’
21,500 represents the cost of all the equipment at the start of the year. Of that, equipment that cost 1,800 is sold, so this has to be removed: 21,500 – 1,800 = 19,700.
Then 15,000 is added to the cost of machinery: 19,700 + 15,000 = 34,700. This is the balance at the end of the year so this is carried down to become the opening balance of the next period.
There must be a misprint in the question that has made C and D identical.
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