Need help with a problem: accounting transactions; assets, liabilities and stockholders' equity.?

A vacant lot acquired for $150,000, on which there is a balance owed of $80,000, is sold for $290,000 in cash. The seller pays the $80,000 owed. What is the effect of these transactions
on the total amount of the seller’s (1) assets, (2) liabilities, and (3) stockholders’ equity?

3 years ago - 1 answers

Best Answer

Chosen by Asker

The easiest way to see it is to make a journal entry.
Dr Cash 290,000
Dr Mortgage Payable 80,000
Cr Land 150,000
Cr Gain on Sale of Land 220,000

Assets were increased by 140,000 (290,000 - 150,000)
Liabilities were decreased by 80,000
Stockholders' Equity was increased by 220,000

3 years ago