Calculate the gain or loss on the sale

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Question - Mercury Inc. purchased equipment in 2019 at a cost of $383,000. The equipment was expected to produce 490,000 units over the next five years and have a residual value of $40,000. The equipment was sold for $199,100 part way through 2021. Actual production in each year was: 2019 = 70,000 units; 2020 = 111,000 units; 2021= 56,000 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 $235,100, calculate the gain or loss on the sale.

4. Prepare the journal entry to record the sale in requirement 3.

Reference no: EM133077896

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