Equipment purchased for $85,000 on January 1, 2010, was sold on July 1, 2013. The company uses the straight-line method of computing depreciation and recognizes $17,000 of depreciation expense annually. When recording the sale, the company should record a debit to Accumulated Depreciation for:

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Using the straight-line method, the equipment would have been depreciated for 3.5 years (Jan 1, 2010-July 1, 2013). The total depreciation expense for those 3.5 years would have been $59,500 ($17,000 per year x 3.5 years). When recording the sale of the equipment, the company would debit Cash (for the amount of cash received), credit Equipment (for the original cost of the equipment), credit Accumulated Depreciation (for the total amount of depreciation expense recognized over the life of the equipment), and recognize a gain or loss for the difference between the cash received and the net book value (original cost minus accumulated depreciation). Since the equipment was sold after 3.5 years of use, the Accumulated Depreciation account should be credited for the total amount of depreciation recognized up to that point, which is $59,500. Therefore, the debit to Accumulated Depreciation would be $59,500.

Equipment Purchased for $85,000 on January 1, 2010, Was Sold