Amanda Company Purchased a Computer That Cost $10,000

Multiple Choice

Amanda Company purchased a computer that cost $10,000.It had an estimated useful life of five years and a residual value of $1,000.The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. Which of the following statements correctly describes the computer sale?

A) Assets and stockholders' equity both increase by $5,000.
B) Assets decrease $5,000 and stockholders' equity is not affected.
C) Assets and stockholders' equity both decrease by $400.
D) Assets and stockholders' equity both increase by $400.