On July 15, 2016, Cottonwood Industries sold a patent and equipment to Roquemore

Question

On July 15, 2016, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $750,000 and $325,000, respectively. The book value of the patent and equipment on the date of sale were $120,000 and $400,000 (cost of $550,000 less accumulated depreciation of $150,000), respectively. Required: Prepare the journal entries to record the sales of the patent and equipment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the sale of the patent

2. Record the sale of equipment

Explanation / Answer

Answer:1

Cash Dr.750000

To patent............................120000

To gain on sale of patent.....630000

Answer:2

Cash Dr...............................325000

Accumulated depreciation Dr.150000

Loss on sale of euipment Dr. 75000

To equipment..........................................550000

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