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?

Explanation:

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 .

answer; post closing trial balance;

answer; closing the loop;