Mercury Incorporated purchased equipment in 2022 at a cost of $110,000. The equipment was expected to produce 380,000 units over the next five years and have a residual value of $34,000. The equipment was sold for $63,400 part way through 2024. Actual production in each year was: 2022 = 54,000 units; 2023 = 86,000 units; 2024 = 43,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date. Required: Calculate the gain or loss on the sale. Prepare the journal entry to record the sale. Assuming that the equipment was instead sold for $84,400, calculate the gain or loss on the sale. Prepare the journal entry to record the sale in requirement 3.
Mercury Incorporated purchased equipment in 2022 at a cost of $110,000. The equipment was expected to produce 380,000 units over the next five years and have a residual value of $34,000. The equipment was sold for $63,400 part way through 2024. Actual production in each year was: 2022 = 54,000 units; 2023 = 86,000 units; 2024 = 43,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date. Required: Calculate the gain or loss on the sale. Prepare the journal entry to record the sale. Assuming that the equipment was instead sold for $84,400, calculate the gain or loss on the sale. Prepare the journal entry to record the sale in requirement 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Mercury Incorporated purchased equipment in 2022 at a cost of $110,000. The equipment was expected to produce 380,000 units over the next five years and have a residual value of $34,000. The equipment was sold for $63,400 part way through 2024. Actual production in each year was: 2022 = 54,000 units; 2023 = 86,000 units; 2024 = 43,000 units. Mercury uses units-of-production
Required:
- Calculate the gain or loss on the sale.
- Prepare the
journal entry to record the sale. - Assuming that the equipment was instead sold for $84,400, calculate the gain or loss on the sale.
- Prepare the journal entry to record the sale in requirement 3.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education