Calculate the equipment total cost at acquisition. The equipment was sold on December 31, 2023 for $230,000 cash. Prepare the journal entry to record the sale.
Calculate the equipment total cost at acquisition. The equipment was sold on December 31, 2023 for $230,000 cash. Prepare the journal entry to record the sale.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On July 1, 2021, STS Inc. acquires a piece of equipment at $230,000 to manufacture product A. It paid $4,000 for shipping and $3,500 for installation of the equipment. Testing fees amounted to
$4,500. The company was able to sell some of the output produced during the testing for $600. It also had to repair one part of the equipment that was damaged during the testing, which cost
$1,000.
The equipment’s useful life is 10 years or 400,000 units of product A. Its residual value is $35,000. It produced 800 units in 2021, 3,000 units in 2022 and 4,500 units in 2023. The
Required
- Calculate the equipment total cost at acquisition.
- The equipment was sold on December 31, 2023 for $230,000 cash. Prepare the
journal entry to record the sale.
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