On September 1, Crestview Company purchased equipment for $25,000. The equipment's estimated salvage value is $2,500. The machine will be depreciated using straight-line depreciation and a five year life. If the company prepares annual financial statements on December 31, the appropriate adjusting journal entry to make on December 31 of the first year would be a:
A) $1,500 debit to Depreciation Expense and a $1,500 credit to Equipment.
B) $4,500 debit to Depreciation Expense and a $4,500 credit to Equipment.
C) $4,500 debit to Depreciation Expense and a $4,500 credit to Accumulated Depreciation.
D) $4,500 debit to Depreciation Expense and a $4,500 credit to Cash.
E) $1,500 debit to Depreciation Expense and a $1,500 credit to Accumulated Depreciation.
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