Use the Information Above to Answer the Following Question

question 52

Multiple Choice

Use the information above to answer the following question.Assume the company decides to sell the computer system on July 1,2017 for $1,000,000.Which of the following statements about the journal entry (or entries) required on July 1 is not correct?

• A) The depreciation expense must be recorded for 6 months, January 1 to July 1.
• B) The Equipment asset account must be credited for $1,600,000 to record the sale.
• C) Accumulated Depreciation is debited for $612,500 in the entry to record the sale.
• D) The loss on the sale is $12,500.

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Definitions:

Equity

The value of an ownership interest in a company, representing shareholders' stake after debts and liabilities have been settled.

Capital Budgeting

The process that a business uses to evaluate potential major investment or expenditure projects, using various techniques to determine their value.

Working Capital Management

The supervision of a company's short-term assets and liabilities to ensure its efficient operation and financial stability.

Credit Management

The process of granting credit, setting the terms it's granted on, recovering this credit when it's due, and ensuring compliance with company credit policy.