Answer:
See explanation section
Explanation:
We know,
Annual depreciation rate under Units-of-production = Depreciable amount/Overall (expected) production
Given,
Purchase value = $400,000
Residual value = $50,000
Expected production = 700,000 units
Depreciable Amount = $(400,000 - 50,000) = $350,000
Annual depreciation rate = $350,000/700,000
Depreciation rate = $0.50
Thrrefore, Accumulated depreciation from 2019 to 2021 = (100,000 + 160,000 + 80,000)*$0.50
= $170,000
We know, Book value of asset = Cost price - Accumulated depreciation
Book value = $400,000 - $170,000 = $230,000
Again, Loss on sale of equipment = Book value - Sales price
Loss on sale of equipment = $230,000 - $210,000
Loss on sale of equipment = $20,000
The journal entry to record the sale =
Debit Cash $210,000
Debit Accumulated Depreciation $170,000
Debit Loss on sale $20,000
Credit Equipment $400,000
