The Austin Land Company sold land for 85,000 in cash. The land ...

[P68T]

The Austin Land Company sold land for 85,000 in cash. The land was originally purchased for 65,000 . At thetime of the sale, 40,000 was still owed to Regions Bank. After the sale, The Austin Land Company paid off theloan. Explain the effect of the sale and the payoff of the loan on the accounting equation.

Question 2

An Internal Service Fund would report which of the following items on its balance sheet
 
  a. Reserved fund balance
  b. Unrestricted net assets
  c. Designated fund balance
  d. Capital contributions

[BUTTHOL369]

Answer to Question 1

Total assets decrease 20,000 (Cash increases by 45,000; Land decreases by65,000)
Total liabilities decrease 40,000 (Note payoff to Regions)Owner's equity increases 20,000 (Sales price  Cost of the land)

Answer to Question 2

B

[P68T]

Thanks for the timely response, appreciate it

[Dominic]

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