You are a credit analyst for First American Bank, and Badger Business has applied for a loan. The company claims to have more than tripled profits from 2016 to 2017 and believes that it should be given prime credit terms. In addition, you note that Badger has expanded its operations, recently paying $37,000 for new equipment that replaced older equipment, which was sold that same year. No other transactions affected the company€™s equipment account. Excerpts from the company€™s 2017 financial statements are provided below.

REQUIRED:
Reconstruct the journal entry to record the sale of equipment and comment on Badger€™s claim that profits more than tripled in 2017.

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2017 2016 Balance sheet: $97,400 $84,800 Equipment Accumulated depreciation (26,400) (24,300) Income statement: Net income 5,200 1,500 Depreciation expense 8,700 7,600 Statement of cash flows: Proceeds from equipment sale 23,400