5. Fellingham Corporation purchased equipment on January 1, 2016, for $240,000. The company estimated the equipment would have a useful life of 7 years with a $30,000 residual value. Fellingham uses the straight-line depreciation method. Early in 2018, Fellingham reassessed the equipment's condition and determined that its total useful life would be only five years in total and that it would have no salvage value. How much would Fellingham report as depreciation on this equipment for 2018?

a. 36,000

b. 42,000

c. 48,000

d. 60,000

6. On July 1, 2021, Williams issued $600,000 of 10% bonds, dated July 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in ten years. The market interest rate for bonds of similar risk and maturity is 12%. The entire bond issue was purchased by Joe, Inc. Due to unforeseen circumstances the company decided to sell its debt investment for $590,000 on January 1, 2023, at which time the bonds have an amortized cost of $580,000. Joes journal entry to record the sale would include a:

a. Debit to investment in bonds for $600,000

b. Debit to discount on bond investment for $20,000

c. Credit to loss on sale of investment for $10,000

d. Credit to cash for $590,000