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5 September, 09:19

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

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  1. 5 September, 11:51
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    The journal entries are as follows

    For sale of the patent

    Cash Dr $750,000

    To Patent $120,000

    To Gain on sale of patent $630,000

    (Being the sale of the patent is recorded)

    For sale of the equipment

    Cash Dr $325,000

    Depreciation Dr $150,000

    Loss on sale of an equipment $75,000

    To Equipment $550,000

    (Being the sale of the equipment is recorded)
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