a)
Cost price of land = $11,500
Sale price of land = $12,765
Gain on sale of land = Sale price of land - Cost price of land
= 12,765 - 11,500
= $1,265
1)
Year 3 Accounting equation
Assets | = | Stockholders' equity | |||
Cash | Land | = | Common stock | + | Retained earnings |
12,765 | - 11,500 | 1,265 |
2)
Gain of $1,265 will be reported in the income statement
3)
Cash inflow from investing activities = $12,765
b)
Cost price of land = $11,500
Sale price of land = $10,810
Loss on sale of land = Cost price of land - Sale price of land
= 11,500 - 10,810
= $690
1)
Year 3 Accounting equation
Assets | = | Stockholders' equity | |||
Cash | Land | = | Common stock | + | Retained earnings |
10,810 | - 11,500 | - 690 |
2)
Loss of $690 will be reported in the income statement
3)
Cash inflow from investing activities = $10,810
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