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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

Respuesta :

Answer:

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.

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