Accounting Help?
I have to write journal entries for various transactions. But there are a couple that I don’t get. The business is family owned 50% by the father and 25% each by his two children. Transaction A: Party Doers Inc. has a decided to sell its land and building to one of the real estate investors. The selling price is $146,000. Party Doers Inc. is not moving. It will continue to do business out of its current location and rent the space out from the new owner in 2008 and beyond. The store fixtures are not being sold. The building has an original cost of $80,000. Transaction B: Party Doers Inc. will use $60,000 of the proceeds of the land and building sale to pay off its notes payable balance. I need journal entries for both transactions.
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Transaction A
The cost of the land/bldg was $80k and is now being sold for $146,000. You didn’t mention depreciation so I presume the building was never depreciated and so the net book value is the same as the cost of $80k. Journal entry:
Dr Cash (from buyer) 146,000
Cr Land/bldg at cost 80,000
Cr Gain on sale of land/bldg 66,000
This sounds like a company so I don’t know why you were given the ownership percentage. If this is a partnership, then the gain wld be split 33k to the father and 16.5k to each of the 2 children.
Transaction B
Dr Notes payable 60k
Cr Cash 60k
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