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.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...
Related questions
Question
1a. What would be the amount on the sale? Was it a gain or a loss?
1b. What would the
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?
Transcribed Image Text: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.
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 6 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
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT