Question

Fairview Clothing purchased​ land, paying $ 100 comma 000 cash and signing a $ 250 comma 000 note payable. In​ addition, Fairview paid delinquent property tax of $ 1 comma 400​, title insurance costing $ 700​, and $ 5 comma 800 to level the land and remove an unwanted building. Record the journal entry for purchase of the land.

Answer 1

Land Dr $357,900

To Cash $107,900

To Note payable $250,000

(Being the land purchased is recorded)

Step-by-step explanation:

The journal entry is shown below:

Land Dr $357,900

To Cash $107,900

To Note payable $250,000

(Being the land purchased is recorded)

The computation of the cash amount is

= $100,000 + 1,400 + $700 + $5,800

= $107,900

For recording this transaction we debited the land as there is a purchase of land which increases the asset account and at the same time the cash is decreased and the note payable is increased