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

question 39

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

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Definitions:

Epiphysis

The terminal section of a lengthy bone that originally develops independently from the main body.

Spongy Bone

Spongy bone, also known as cancellous bone, is less dense bone that is found at the ends of long bones and in the inner layers of other bones, characterized by a porous structure.

Diaphysis

The shaft or central part of a long bone, typically cylindrical in shape and containing the marrow cavity.

Epiphyseal Lines

Remnants of the epiphyseal plate in long bones, signifying the end of bone growth in length.