Marks Consulting Purchased Equipment Costing $45,000 on January 1, Year

Multiple Choice

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a:

A) Debit to accumulated depreciation for $22,500.
B) Credit to loss on sale for $10,000.
C) Credit to cash for $20,000.
D) Debit to loss on sale for $10,000.
E) Debit to gain on sale for $2,500.