Rio Grande Company Purchased Equipment on January 1, 2017 for $75,000

Rio Grande Company purchased equipment on January 1, 2017 for $75,000. The estimated useful life of the equipment is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets. Which of the following journal entries would Rio Grande record if the equipment is sold for $17,000 after three years?
a.
$\begin{array}{lrr} \text { Equipment } &75,000\\ \text {Loss on Disposal of Plant Asset } &800\\ \text {Cash } &&17,000\\ \text {Accumulated Depreciation-Equipment}&&58,800\end{array}$

b.
$\begin{array}{lrr} \text { Cash } &17,000\\ \text {Gain on Disposal of Plant Asset } &&6,200\\ \text { Equipment}&&10,800\end{array}$

c.
$\begin{array}{lrr} \text { Cash } &17,000\\ \text { Depreciation Expense} &10,800\\ \text { Loss on Disposal of Plant Asset}&47,200\\ \text { Equipment} &&75,000\\\end{array}$

d.
$\begin{array}{lrr} \text {Cash } &17,000\\ \text {Accumulated Depreciation-Equipment } &58,800\\ \text { Equipment } &&75,000\\\text {Gain on Disposal of Plant Asset}&&800\end{array}$

Solution (next page):
Assuming that Rio Grande Company kept the equipment for its entire five-year estimated useful life, the depreciation schedule on the equipment would be as follows.
$\begin{array}{lccrrr}\text { Depreciation }&&\text { Depreciation }&&\text { Accumulated }&\text { Book }\\\text { Date}&\text { Factor}&\text { Expense}&\text { Cost}&\text { Depreciation}&\text { Value }\\\hline1 / 1 / 17 & & & \$ 75,000 & \$0 &\$75,000 \\12 / 31 / 17 & 40 \% & \$ 30,000 & 75,000 & 30,000 & 45,000 \\12 / 31 / 18 & 40 \% & 18,000 & 75,000 & 48,000 & 27,000 \\12 / 31 / 19 & 40 \% & 10,800 & 75,000 & 58,800 & 16,200 \\12 / 31 / 20 & 40 \% & 6,2000^{*} & 75,000 & 65,000 & 10,000 \\12 / 31 / 21 & 40 \% & 0 & 75,000 & 65,000 & 10,000\end{array}$
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* Because the equipment's book value can't drop below its estimated salvage value, depreciation expense for 2020 can't exceed $6,200.