Allyn Company purchased equipment costing $55,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 5 years. Double-declining-depreciation is used, and all depreciation has been recorded as of December 31, Year 2. If the equipment is sold on December 31, Year 2 for $15,000, the journal entry to record the sale is:
A. Debit Cash, $15,000; Debit Accumulated Depreciation, $13,200; Debit Loss on Sale, $26,800; Credit Equipment, $55,000.
B. Debit Cash, $15,000; Debit Accumulated Depreciation, $40,000; Credit Equipment, $55,000.
C. Debit Cash, $15,000; Debit Accumulated Depreciation, $35,200; Debit Loss on Sale, $4,800; Credit Equipment, $55,000.
D. Debit Cash, $15,000; Debit Loss on Sale, $40,000; Credit Equipment, $55,000.
E. Debit Cash, $15,000; Debit Accumulated Depreciation, $22,000; Debit Loss on Sale, $18,000; Credit Equipment, $55,000.
Answer: C
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