Question

In the Lucas Company, there was an increase in the land account during the year of $24,000. Analysis reveals that the change resulted from a cash sale of land at cost $55,000, and a cash purchase of land for $79,000. In the statement of cash flows, the change in the land account should be reported in the investment section

Answer 1

The increase of $24,000 in the Lucas Company's land account due to land transactions is recorded in the investing activities section of the statement of cash flows, reflecting a sale and purchase of land.

Step-by-step explanation:

In the Lucas Company, there was an increase in the land account during the year of $24,000 due to a cash sale of land at cost $55,000, and a cash purchase of land for $79,000. This transaction should be reported in the investing activities section of the statement of cash flows.

The sale of land at cost generates cash inflow and is recorded as a positive amount, while the purchase of land results in a cash outflow and is captured as a negative amount.