Beachwood Clothing Company operates a chain of high end men's clothing stores. Beachwood owned land that was originally purchased as a store location. However, after abandoning the plan to build a new store, the land that had cost $5,000 was sold for $6,000 cash. Write down the journal entries that would be required to record the sale of the land?

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Business

Redbull

13 December, 06:30

Beachwood Clothing Company operates a chain of high end men's clothing stores. Beachwood owned land that was originally purchased as a store location. However, after abandoning the plan to build a new store, the land that had cost $5,000 was sold for $6,000 cash. Write down the journal entries that would be required to record the sale of the land?

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Santino · Answer 1

Beach wood Clothing Company

General Journal

Sr. No Particulars Debit Credit

Cash $ 6000

Land $ 5000

Profit and Loss $ 1000

Under double accounting system the profit and loss account is credited for any profits. Since land is sold for a profit of $ 1000 it will be credited.

$ 6000 cash is debited increasing the cash amount and land is credited with $ 5000 showing that land having a value of $ 5000 has been sold. the additional amount of $ 1000 is credited.