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How to properly record the sale of Fixed Building and Land

Customer Question
( Restuarant Business) Sell of...
How to properly record the sale of Fixed Building and Land ( Restuarant Business)

Sell of property and Building- F/A-Bldg. 920,172
F/A-Land 600,000
Accum.Depre- 45,222

Selling price 1,795,000
Less- Sellers fees 108,101
Notes payable Loan 1,206,247
Proceeds 480,651
Submitted: 6 years ago.Category: Finance
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Answered in 54 minutes by:
8/13/2011
Financial Professional: Rakhi Vasavada, Financial and Legal Consultant replied 6 years ago
Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4,546
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Dear Friend,

 

If a company sells land that it was holding for future use, the company will 1) debit Cash for the amount it receives, 2) credit Land for the amount in the general ledger account that applies to the land being sold, and 3) record the difference as a gain or loss on sale of land.

 

The entry would be then, as follows:

 

Cash Account DR $ 1,795,000

Accumulated Depreciation A/c DR 45,222

Sellers Fees A/c 108101

 

TO Building A/c $ 920,172

TO Land A/c $ 600,000

TO Gain on sale of property $ 428151

 

---------------------------------------------------------------------------------------

 

Now, you paid out notes payable

 

Notes Payable A/c DR 1,206,147

TO Cash Ac $1,206,147

 

I am sure this would help...

Warm Regards,

Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4,546
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Customer reply replied 6 years ago
In the seller fees there is $ 16k going to property tax. Since we've been making entries to Real Estate Tax Payable account should i apply the 16k to that account
Financial Professional: Rakhi Vasavada, Financial and Legal Consultant replied 6 years ago

Dear Friend,

 

YES... You may do so..

Regards,

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Rakhi Vasavada
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