lowa Development (ID) made the following land sales and had the following cash c

Question

lowa Development (ID) made the following land sales and had the following cash collections: 2012: Sold Altoona land for $2,000,000 that cost ID $1,200,000. The land agreement required payments of $1,000,000 within one week of occupancy of the land, and the other $1,000,000 in 2013. ID received the $1,000,000 payment 2013: Sold Boone land for $2,400,000 that cost ID $1,200,000. The land agreement required payments of $800,000 within one week of occupancy of the land and additional payments of $800,000 in 2014 and 2015. ID received the $800,000 payment and also a $500,000 payment for the Altoona land.

Explanation / Answer

Answer :-

Iowa Development (ID) Journal Entries Date Transaction Particulars Debit Credit 2012 1-a Altoona Land $2,000,000         To Sales $2,000,000 Altoona Land sold for $2,000,000 2012 1-b Cash Collection $1,000,000         To Accounts Receivable for Altoona Land $1,000,000 Payment received of $1,000,000 for Altoons Land 2012 1-c Operating Cost $1,200,000 Gross Profit $800,000         To Sales $2,000,000 Cost of Altoona Land sold is $1,200,000 2013 2-a Boone Land $2,400,000         To Sales $2,400,000 Boone Land sold for $2,400,000 2013 2-b Cash Collection $1,300,000         To Accounts Receivable for Boone Land $800,000         To Accounts Receivable for Altoona Land $500,000 Payment received of $800,000 for Boone Land & $500,000 for Altoona Land 2013 2-c Operating Cost $1,200,000 Gross Profit $1,200,000         To Sales $2,400,000 Cost of Boone Land sold is $1,200,000

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