Prepare the journal entry to record the sale in requirement

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Reference no: EM133497131

Case: Mercury Inc. purchased equipment in 2019 at a cost of $143,000. The equipment was expected to produce 370,000 units over the next five years and have a residual value of $32,000. The equipment was sold for $71,900 part way through 2021. Actual production in each year was: 2019 = 52,000 units; 2020 = 83,000 units; 2021 = 42,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.

Required:

Question 1. Calculate the gain or loss on the sale.

Question 2. Prepare the journal entry to record the sale.

Question 3. Assuming that the equipment was instead sold for $108,900, calculate the gain or loss on the sale.

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

Reference no: EM133497131

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