On July 1, 2021, STS Inc. acquires a piece of equipment at $230,000 to manufacture product A.

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Question:

On July 1, 2021, STS Inc. acquires a piece of equipment at $230,000 to manufacture product A. It paid $4,000 for shipping and $3,500 for installation of the equipment. Testing fees amounted to

$4,500. The company was able to sell some of the output produced during the testing for $600. It also had to repair one part of the equipment that was damaged during the testing, which cost

$1,000.

The equipment's useful life is 10 years or 400,000 units of product A. Its residual value is $35,000.

It produced 800 units in 2021, 3,000 units in 2022, and 4,500 units in 2023. The units of production method is to be used for depreciation.

Required

1) Calculate the equipment's total cost at acquisition.

2) The equipment was sold on December 31, 2023, for $230,000 cash. Prepare the journal entry to record the sale.