On January 1, Year 1, 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 Year 3, Prairie Enterprises changed its plans and sold the land.

Required
a. Assume that the land was sold for $29,500 in Year 3.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the Year 3 income statement related to the sale of the land?
(3) What amount would Prairie report on the Year 3 statement of cash flows related to the sale of the land?
b. Assume that the land was sold for $24,000 in Year 3.
(1) Show the effect of the sale on the accounting equation.
(2) What amount would Prairie report on the Year 3 income statement related to the sale of the land?
(3) What amount would Prairie report on the Year 3 statement of cash flows related to the sale of the land?