Mercury Inc. purchased equipment in 2019 at a cost of $207,000. The equipment was expected to produce 570,000 units over the next five years and have a residual value of $36,000. The equipment was sold for $106,600 part way through 2021. Actual production In each year was: 2019 - 82,000 units; 2020 - 130,000 units: 2021 - 66,000 units. Mercury uses units-of-production depreclation, and all depreciation has been recorded through the disposal date. Requlred: 1. Calculate the gain or loss on the sale. 2. Prepare the Journal entry to record the sale. 3. Assuming that the equipment was Instead sold for $138,600, calculate the galn or loss on the sale. 4. Prepare the Journal entry to record the sale In requirement 3.

Mercury Inc. purchased equipment in 2019 at a cost of $207,000. The equipment was expected to produce 570,000 units over the next five years and have a residual value of $36,000. The equipment was sold for $106,600 part way through 2021. Actual production In each year was: 2019 - 82,000 units; 2020 - 130,000 units: 2021 - 66,000 units. Mercury uses units-of-production depreclation, and all depreciation has been recorded through the disposal date. Requlred: 1. Calculate the gain or loss on the sale. 2. Prepare the Journal entry to record the sale. 3. Assuming that the equipment was Instead sold for $138,600, calculate the galn or loss on the sale. 4. Prepare the Journal entry to record the sale In requirement 3.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1a. What would be the amount on the sale? Was it a gain or a loss?

1b. What would the journal entry look like for the sale in 1a?

2a. Assuming that the equipment was instead sold for $138,600, calculate the gain or loss on the sale.

2b. What would the journal be for the sale in 2a?

Mercury Inc. purchased equipment in 2019 at a cost of $207,000. The equipment was expected to produce 570,000 units over the
next five years and have a residual value of $36,000. The equipment was sold for $106,600 part way through 2021. Actual production
In each year was: 2019 = 82,000 units; 2020 = 130,000 units; 2021 = 66,000 units. Mercury uses units-of-production depreclation, and
all depreciation has been recorded through the disposal date.
Required:
1. Calculate the galn or loss on the sale.
2. Prepare the journal entry to record the sale.
3. Assuming that the equipment was Instead sold for $138,600, calculate the gain or loss on the sale.
4. Prepare the Journal entry to record the sale in requirement 3.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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