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 1996 to 1997 and believes that it should be given prime credit terms. In addition, you note that Badger has expanded its opera¬ tions, 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 1997 financial statements are provided below. 1 997 1 996 Balance Sheet: j Equipment $97,400 $84,800 Accumulated Depreciation (26,400) (24,300) Income Statement: Net Income 5,200 1,500 Depreciation Expenses 8,700 7,600 Statement of Cash Flows: Proceeds form equipment sale 23,400 0 REQUIRED: Reconstruct the journal entry to record the sale of equipment, and comment on Badger’s claim that profits more than tripled in 1997.