Respuesta :
Answer:
Accounting Equation is expressed as:
a. Assets = Liabilities + Equity
When property or land is sold for cash, following journal entry is recorded:
Cash A/c Dr. 290,000
To Land 150,000
To Gain on sale on sale of land 140,000
(Being sale of land for cash recorded)
The effect of the above transaction would be:
Assets would increase by net amount i.e $290,000 - 150,000 i.e by $140,000.
No effect on the liabilities
Retained earnings would increase by $140,000
b. When loan is discharged,
Loan A/C Dr. 80,000
To Cash 80,000
(being discharge of loan recorded)
Following would be the effect:
Assets would increase by net amount i.e $290,000 - 150,000- 80,000 i.e $60,000
Liabilities would reduce by $ 80,000
Retained earnings would increase by $140,000
