Mercury Incorporated purchased equipment in 2022 at a cost of $400,000. The equipment was expected to produce 700,000 units over the next five years and have a residual value of $50,000. The equipment was sold for $210,000 part way through 2024. Actual production in each year was: 2022 = 100,000 units; 2023 = 160,000 units; 2024 = 80,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date.

Required:

Calculate the gain or loss on the sale.

Prepare the journal entry to record the sale.

Assuming that the equipment was instead sold for $245,000, calculate the gain or loss on the sale.

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