Megan Corporation purchased equipment on January 1, 2016, for $168,000 It is estimated that the equipment will have a $14,000 residual value at the end of its 8-year useful life. It is also estimated that the equipment will produce 110,000 units over its 8- year life. Round the rate per unit to two decimals. On December 31, 2018, Megan sells the equipment for $85,000. Megan produced 20,000 units in 2016, 24,000 units in 2017 and 22,000 units in 2018.

(a) Determine the carrying amount of the equipment on December 31, 2018, using the units-of-production method of depreciation.

(b) Prepare the appropriate journal entry for the sale of the equipment.