Mercury Incorporated purchased equipment in 2022 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 2024. Actual production in each year was: 2022 = 82,000 units; 2023 = 130,000 units; 2024 = 66,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date. Required: 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 gain or loss on the sale. 4. Prepare the journal entry to record the sale in requirement 3.
Mercury Incorporated purchased equipment in 2022 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 2024. Actual production in each year was: 2022 = 82,000 units; 2023 = 130,000 units; 2024 = 66,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date. Required: 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 gain or loss on the sale. 4. Prepare the journal entry to record the sale in requirement 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mercury Incorporated purchased equipment in 2022 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 2024. Actual production in each year was: 2022 = 82,000 units; 2023 = 130,000 units; 2024 = 66,000 units. Mercury uses units-of-production depreciation, and all depreciation has been
recorded through the disposal date.
Required:
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 gain or loss on the sale.
4. Prepare the journal entry to record the sale in requirement 3.
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