Mercury Inc. purchased equipment in 2016 at a cost of $169,000. The equipment wa

Question

Mercury Inc. purchased equipment in 2016 at a cost of $169,000. The equipment was expected to produce 300,000 units over the next five years and have a residual value of $49,000. The equipment was so in each year was: 2016 42,000 depreciation has been recorded through the disposal date d for $103,800 part way through 2018. Actual production units; 2017 67,000 units; 2018 34.000 units. Mercury uses units-of-production depreciation, and all Required 1. Prepare the journal entry to record the sale. 2. Assuming that the equipment was sold for $114,800, prepare the journal entry to record the sale. Complete this question by entering your answers in the tabs below Required 1Required2 Prepare the journal entry to record the sale. (If no entry is required for a transaction/ in the first account field.) event, select "No journal entry required" Journal entry worksheet Record the sale. DebitCredit

Explanation / Answer

Depreciation per unit = (169000-49000)/300000= $0.4 Accumulated depreciation = (42000+67000+34000)*0.4= $57200 1 Cash 103800 Accumulated depreciation—equipment 57200 Loss on sale 8000       Equipment 169000 2 Cash 114800 Accumulated depreciation—equipment 57200       Gain on sale 3000       Equipment 169000

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