Wilson Engineering Purchased a Depreciable Asset Costing $45,000 on January

question 71

Multiple Choice

Wilson Engineering purchased a depreciable asset costing $45,000 on January 1, Year 1. The asset is estimated to have a residual value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the asset 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) A debit to accumulated depreciation for $22,500.
• C) A debit to loss on sale for $10,000.
• D) A credit to loss on sale for $10,000.
• E) A debit to gain on sale for $2,500.

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Definitions:

Income Effect

The change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.

Complementary Effect

The impact that the improvement or performance of one product or service has on the demand for another that is used in conjunction with it.

Fast-Food Restaurants

Eateries that serve food quickly and efficiently to customers, often characterized by a limited menu of pre-prepared or rapidly cooked items.

Oligopolistic Competition

A market structure characterized by a small number of firms that dominate the market, leading to competitive yet interdependent pricing and marketing strategies.