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26 April, 05:01

Fairview Clothing purchased land, paying $ 100 comma 000 cash and signing a $ 250 comma 000 note payable. In addition, Fairview paid delinquent property tax of $ 1 comma 400 , title insurance costing $ 700 , and $ 5 comma 800 to level the land and remove an unwanted building. Record the journal entry for purchase of the land.

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  1. 26 April, 08:01
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    Land Dr $357,900

    To Cash $107,900

    To Note payable $250,000

    (Being the land purchased is recorded)

    Explanation:

    The journal entry is shown below:

    Land Dr $357,900

    To Cash $107,900

    To Note payable $250,000

    (Being the land purchased is recorded)

    The computation of the cash amount is

    = $100,000 + 1,400 + $700 + $5,800

    = $107,900

    For recording this transaction we debited the land as there is a purchase of land which increases the asset account and at the same time the cash is decreased and the note payable is increased
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