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 $800,000 and $350,000, respectively. The book value of the patent and equipment on the date of sale were $145,000 and $430,000 (cost of $605,000 less accumulated depreciation of $175,000), 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.)

Explanation / Answer

Journal entry to record the sale of patent Date Account Title Debit Credit July 15,2016 Cash 800000 Patent 145000 Gain on sale of patent 655000 Journal entry to record the sale of equipment Date Account Title Debit Credit July 15,2016 Cash 350000 Accumulated depreciation 175000 Loss on sale of equipment 80000 Equipment 605000

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