Sunland Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $60000 that will produce an estimated 130000 units over its useful life. Estimated salvage value at the end of its useful life is $4100. What is the depreciation cost per unit

Dr Inventory Purchases $250

Cr Trade Payables              $250

Explanation:

At the time of the purchase, Inventory purchases which is an asset in nature has been increased and hence must be debited by $250 and similarly the Payable has been increased which is liability in nature and hence must be credited with $250. The entry would be as under:

Dr Inventory Purchases $250

Cr Trade Payables              $250