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Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated

Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on January 1, Year 5 for $22,500, the journal entry to record the sale will include a:

Debit to accumulated depreciation for $20,000.

Credit to cash for $22,500.

Debit to gain on sale for $2,500.

Debit to equipment for $45,000.

Credit to loss on sale for $2,500.

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