Question

Cheng Company has recently decided to accept a proposal from the City of Bel Aire that publicly owned property with a large warehouse located on it will be donated to Cheng if Cheng will build a branch plant in Bel Aire. The appraised value of the property is $377,000 and of the warehouse is $762,000.

Prepare the entry by Cheng for the receipt of the properties. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Cheng Company will debit the Land Inventory and Warehouse Inventory accounts for the appraised value of the properties and credit the Donated Property and Donated Warehouse accounts.

Step-by-step explanation:

The entry by Cheng for the receipt of the properties would be:

Debit: Land Inventory - $377,000

Debit: Warehouse Inventory - $762,000

Credit: Donated Property - $377,000

Credit: Donated Warehouse - $762,000