On January 1, 2018, Prairie Enterprises purchased a parcel of land for $28,000 cash. At the time
Question:
On January 1, 2018, 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 2020, Prairie Enterprises changed its plans and sold the land.
Required
a. Assume that the land was sold for $29,500 in 2020.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the 2020 income statement related to the sale of the land?
(3) What amount would Prairie report on the 2020 statement of cash flows related to the sale of the land?
b. Assume that the land was sold for $24,000 in 2020.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the 2020 income statement related to the sale of the land?
(3) What amount would Prairie report on the 2020 statement of cash flows related to the sale of the land?
Step by Step Answer:
Prairie Enterprises 2020 Accounting Equation Assets Stockhol...View the full answer
Survey of Accounting
ISBN: 978-1259631122
5th edition
Authors: Thomas Edmonds, Christopher Edmonds, Philip Olds, Frances McNair, Bor Yi Tsay
