Record Journal Entries for Equipment Purchase and Depreciation

Complete the following problem using an Excel Worksheet. On August 1, 2014 Mayfere Co. commenced business and purchased production equipment for $250,000 cash. The equipment has an estimated useful life of eight years, an estimated total production output of 200,000 units, and a residual value of $40,000. The equipment was depreciated using the units-of-production method. Actual units of output over three years were: 2014: 11,000; 2015: 25,000; and 2016: 35,000. On January 1, 2017, the company sold the original equipment and purchased new production. The company sold the original equipment for $135,000. They purchased the new equipment for $300,000. This new equipment has an estimated useful life of 10 years, an estimated total output of 400,000 units, and a residual value of $50,000. The new equipment will be depreciated using the straight-line method. Prepare journal entries to record the transactions for: 1. 2. 3. 4. 5. The equipment in 2014 Depreciation for 2014, 2015 and 2016 The sale of the old equipment The purchase of the new equipment in 2017 The depreciation of the new equipment in 2017