FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Depreciation Methods
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Exercise 11-10 (Algo) Disposal of property, plant, and equipment [LO11-2] Mercury Incorporated purchased equipment in 2022 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 2024. Actual production in each year was: 2022 = 52,000 units; 2023 = 83,000 units; 2024 = 42,000 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 $108,900, calculate the gain or loss on the sale. 4. Prepare the journal entry to record the sale in requirement 3. Complete this question by entering your answers in the tabs below. Required 1 Answer is not complete. No 1 Required 2 Required 3 Required 4 Prepare the journal entry to record the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Event 1 General Journal Accumulated depreciation-equipment Loss on sale of equipment Required 2 >›› Debit 15,600 x Credit 15,600
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Transcribed Image Text:Exercise 11-10 (Algo) Disposal of property, plant, and equipment [LO11-2] Mercury Incorporated purchased equipment in 2022 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 2024. Actual production in each year was: 2022 = 52,000 units; 2023 = 83,000 units; 2024 = 42,000 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 $108,900, calculate the gain or loss on the sale. 4. Prepare the journal entry to record the sale in requirement 3. Complete this question by entering your answers in the tabs below. Required 1 Answer is not complete. No 1 Required 2 Required 3 Required 4 Prepare the journal entry to record the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Event 1 General Journal Accumulated depreciation-equipment Loss on sale of equipment Required 2 >›› Debit 15,600 x Credit 15,600
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