On July 15, 2021, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $850,000 and $375,000, respectively. On the date of the sale, the book value of the patent was $ $170,000, and the book value of the equipment was $460,000 (cost of $660,000 less accumulated depreciation of $200,000) Prepare the journal entries to record the sales of the patent and equipme

Question

Gage Barker

Business

2 July, 02:51

On July 15, 2021, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $850,000 and $375,000, respectively. On the date of the sale, the book value of the patent was $ $170,000, and the book value of the equipment was $460,000 (cost of $660,000 less accumulated depreciation of $200,000) Prepare the journal entries to record the sales of the patent and equipme

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Rosemary Oconnell · Answer 1

The journal entries for the sales of the patent and equipment are as follows

Dr Cash $1,225,000

Dr Accumulated depreciation $200000

Cr Patent asset account $170000

Cr Equipment asset account $660000

Cr Gain on disposal of assets $595000

Explanation:

The entries have been passed based on the sales of patent and equipment where the sum of $1225000 was realized in cash ($850000+$375000).

The gain on the disposal of $595000, is arrived at by deducting book values of the asset from the proceeds on disposal ($1225000-$170000-$460000).

The entry passed in accumulated depreciation is to write off the accumulated depreciation on the equipment sold.