Question

On October 17, Nikle Company purchased a building and a plot of land for $750,000.
The building was valued at $500,000 while the land carried a value of $250,000.
Nikle paid $300,000 down in cash and signed a note payable for the balance.
Prepare the journal entry for this transaction.

Answer 1

Answer:

Building (debit) $500,000

Land (debit) $250,000

Cash (credit) $300,000

Note payable (credit) $450,000

Explanation:

Recognize the Assets : Building $500,000 and Land $250,000, de-recognized the assets of cash $300,000 and recognize liability arising from the note payable of $450,000.