Comparing gross margin and gain on sale of land
Usrey Sales Company had the following balances in its accounts on January 1, 2012.
Cash | $ 70,000 |
Merchandise Inventory | 50,000 |
Land | 120,000 |
Common Stock | 100,000 |
Retained Earnings | 140,000 |
Usrey experienced the following events during 2012.
1.Sold merchandise inventory that cost $40,000 for $75,000.
2.Sold land that cost $50,000 for $80,000
Required
a Determine the amount of gross margin recognized by Usrey.
b Determine the amount of the gain on the sale of land recognized by Usrey.
c Comment on how the gross margin versus the gain will be recognized on the income statement.
d Comment on how the gross margin versus the gain will be recognized on the statement of cash flows.
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