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.
(If an amount box does not require an entry, leave it blank.)

Answer 1

the journal entry for this transaction is :

Building $500,000 (debit)

Land $250,000 (debit)

Cash $300,000 (credit)

Note Payable $450,000 (credit)

Step-by-step explanation:

Recognize separately the assets purchased as : Building $500,000 and Land $250,000 and also recognize the Liability - Note Payable to the amount of $450,000 - the balance remaining after a cash settlement of the purchase price of $300,000.