Sabel Co. purchased assembly equipment for $500,000 on January 1, 2016. Sabel’s financial condition immediately prior to the purchase is shown in the following horizontal statements model:
The equipment is expected to have a useful life of 200,000 machine hours and a salvage value of $20,000. Actual m a chine-hour use was as follows:
2016 …. 56,000
2017 ….. 61,000
2018 ….. 42,000
2019 ….. 36,000
2020 ….. 10,000
a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.
b. Assume that Sabel earns $230,000 of cash revenue during 2016. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a financial statements model like the preceding one.
c. Assume that Sabel sold the equipment at the end of the fifth year for $20,600. Record the general journal entry for the sale.