Question

The North Pole Economic Development Corporation owned an idle piece of real estate consisting of land and a factory building. The City gave title to this property to Frosty the Snowman Company in exchange for $100,000 cash. The fair value of the building was $200,000 and the land had a fair value of $50,000. Prepare the journal entry to record this transaction for Frosty. (CPA) TTI Arial 3 (12pt) TEE 5.02

Answer 1

TRANSACTION IN THE BOOKS OF FROSTY -

BUILDING ACCOUNT DEBIT $200000

LAND ACCOUNT DEBIT    $50000

CASH ACCOUNT CREDIT $100000

PROFIT & LOSS ACCOUNT CREDIT $150000 (BALANCING FIGURE)

(BEING LAND AND BUILDING ACQUIRED FROM NORTH POLE ECONOMIC DEVELOPMENT CORPORATION AND PROFIT BOOKED)

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