Question

Ron Company sold land that cost $150,000 for $160,000. The company also sold inventory that cost $60,000 for $85,000. Based on this information, the company will report ______. a) A gain of $10,000 on land and a gain of $25,000 on inventory b) A gain of $10,000 on land and a loss of $25,000 on inventory c) A loss of $10,000 on land and a gain of $25,000 on inventory d) A loss of $10,000 on land and a loss of $25,000 on inventory

Answer 1

To determine the gains or losses, you subtract the cost from the selling price for both the land and inventory:

For land:

Gain on Land = Selling Price - Cost = $160,000 - $150,000 = $10,000 (Gain)

For inventory:

Gain on Inventory = Selling Price - Cost = $85,000 - $60,000 = $25,000 (Gain)

So, the company will report:

a) A gain of $10,000 on land and a gain of $25,000 on inventory.

Step-by-step explanation: