Allyn Company purchased equipment costing $55,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 5 years.

PART A- Straight-line depreciation is used, and all depreciation has been recorded as of December 31, Year 4. If the equipment is sold on December 31, Year 4 for $20,000, the journal entry to record the sale is:

A) Debit Cash, $20,000; Debit Loss on Sale, $35,000; Credit Equipment, $55,000.

B) Debit Cash, $20,000; Debit Accumulated Depreciation, $35,000; Credit Equipment, $55,000.

C) Debit Cash, $20,000; Credit Equipment, $15,000, Credit Gain on Sale, $5,000.

D) Debit Cash, $20,000; Debit Depreciation Expense, $40,000; Credit Equipment, $55,000, Credit Gain on Sale, $5,000.

E) Debit Cash, $20,000; Debit Accumulated Depreciation, $40,000; Credit Equipment, $55,000, Credit Gain on Sale, $5,000.