Question

6. Mercury Inc. purchased equipment in 2016 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 was through 2018. Actual production in each year was: 2016= 54,000 units; 2017=86,000 units; 2018=43,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.

Required:

1. Prepare the journal entry to record the sale.

2. Assuming that the equipment was sold for $84,400, prepare the journal entry to record the sale.

Complete this question by entering your answers in the boxes below.

Prepare the journal entry to record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the next account field.)

Journal entry worksheet

Event	General Journal	Debit	Credit
1

Answer 1

1) Journal entry

Date	account and explanation	debit	credit
	Cash	63400
	Accumulated depreciation-Equipment (183000*.20)	36600
	Loss on sale of equipment	10000
	Equipment		110000
	(To record sale of equipment)

2) Journal entry

Date	account and explanation	debit	credit
	Cash	84400
	Accumulated depreciation-Equipment (183000*.20)	36600
	Gain on sale of equipment		11000
	Equipment		110000
	(To record sale of equipment)