On January 1 2016 Prairie Enterprises purchased a parcel of
On January 1, 2016, Prairie Enterprises purchased a parcel of land for $28,000 cash. At the time of purchase, the company planned to use the land for a warehouse site. In 2018, Prairie Enterprises changed its plans and sold the land.
Required
a. Assume that the land was sold for $29,500 in 2018.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the 2018 income statement related to the sale of the land?
(3) What amount would Prairie report on the 2018 statement of cash flows related to the sale of the land?
b. Assume that the land was sold for $24,000 in 2018.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the 2018 income statement related to the sale of the land?
(3) What amount would Prairie report on the 2018 statement of cash flows related to the sale of the land?
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