Mercury Inc. purchased equipment in 2019 at a cost of $169,000. The equipment was expected to produce 300,000 units over the next five years and have a residual value of $49,000. The equipment was sold for $103,800 part way through 2021. Actual production in each year was: 2019 = 42,000 units 2020 = 67,000 units 2021 = 34,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.

Required:

3. Assuming that the equipment was instead sold for $114,800, calculate the gain or loss on the sale.

4. Prepare the journal entry to record the sale in requirement 3.