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 $880,000 and $390,000, respectively. The book value of the patent and equipment on the date of sale were $185,000 and $478,000 (cost of $693,000 less accumulated depreciation of $215,000), respectively.

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.)

On July 15, 2016, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $880,000 and $390,000, respectively. The book value of the patent and equipment on the date of sale were $185,000 and $478,000 (cost of $693,000 less accumulated depreciation of $215,000), respectively.

Explanation / Answer

Journal Entry Particulars Dr Amt Cr Amt SALE OF EQUIPMENT Cash Dr                 390,000.00 Loss on Sale of Equipment Dr = 693,000-215,000 - 390,000                   88,000.00 Accumulated Depreciation Dr                 215,000.00 To Equipment         693,000.00 SALE of Patent Cash A/C Dr                 880,000.00 To Patent         185,000.00 To Gain on sale of Patent = 880,000 -185,000         695,000.00

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