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. Straight-line depreciation is used, and all depreciation has been recorded as of December 31, Year 4. If the equipment is sold on December 31, Year 4 for $20,000, the journal entry to record the sale is:
A. Debit Cash, $20,000; Debit Loss on Sale, $35,000; Credit Equipment, $55,000.
B. Debit Cash, $20,000; Debit Accumulated Depreciation, $35,000; Credit Equipment, $55,000.
C. Debit Cash, $20,000; Credit Equipment, $15,000, Credit Gain on Sale, $5,000.
D. Debit Cash, $20,000; Debit Accumulated Depreciation, $40,000; Credit Equipment, $55,000, Credit Gain on Sale, $5,000.
E. Debit Cash, $20,000; Debit Depreciation Expense, $40,000; Credit Equipment, $55,000, Credit Gain on Sale, $5,000.
Answer: D
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A. are unlikely to raise antitrust issues. B. should undergo rule of reason analysis. C. should be subject to strict scrutiny analysis. D. are per se violations of U.S. antitrust laws.
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A) have an independent audit of financial statements. B) have an audit of the internal control systems. C) fully document and certify the company's system of internal controls. D) do all of these.
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