A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 per year.Before preparing the entry to record the sale of the equipment,the company should first debit:
A)Depreciation Expense for $40,000 and credit Accumulated Depreciation for $40,000.
B)Accumulated Depreciation for $40,000 and credit Cash for $40,000.
C)Depreciation Expense for $20,000 and credit Accumulated Depreciation for $20,000.
D)Cash for $20,000 and credit Depreciation Expense for $20,000.

Question

Quizplus · Accepted Answer

Before a disposal is recorded,depreciation must be brought up to the date of the sale.
Debit Depreciation Expense and credit Accumulated Depreciation for $20,000 (or full year depreciation of $40,000 × 6 months (sold half-way through the year)÷ 12 months)

A Company Sells a Piece of Equipment Half-Way Through the Accounting