On October 17, Nikle Company purchased a building and a plot of land for $482,500. The building was valued at $250,900 while the land carried a value of $231,600. Nikle paid $68,500 down in cash and signed a notes payable for the balance. Prepare the journal entry for this transaction. If an amount box does not require an entry, leave it blank. Oct. 17
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
![### Journal Entry for Purchase of Building and Land
On October 17, Nikle Company purchased a building and a plot of land for $482,500. The building was valued at $250,900 while the land carried a value of $231,600. Nikle paid $68,500 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.**
| Oct. 17 | [Select] | [ ] | [ ] |
|---------|------------------------------|-----------|-----------------|
| Oct. 17 | [Select] | [ ] | [ ] |
| Oct. 17 | [Select] | [ ] | [ ] |
Please select the appropriate accounts and amounts for each part of the journal entry.
#### Explanation of Journal Entry Details:
You will need to:
1. **Debit the Land account** for the cost of the land ($231,600).
2. **Debit the Buildings account** for the cost of the building ($250,900).
3. **Credit the Cash account** for the down payment made in cash ($68,500).
4. **Credit Notes Payable** for the balance owing on the note payable, which is calculated as:
\[ \text{Total Purchase Price} - \text{Cash Payment} = $482,500 - $68,500 = $414,000 \]
### Example Journal Entry
| Oct. 17 | Land | 231,600 | |
|---------|-------------------------------|-----------|-----------------|
| Oct. 17 | Buildings | 250,900 | |
| Oct. 17 | Cash | | 68,500 |
| Oct. 17 | Notes Payable | | 414,000 |
### Further Explanation:
- **Debit Land and Buildings** because these are assets being acquired, thus increasing the asset accounts.
- **Credit Cash** because the company is paying out cash, which decreases the cash account.
- **Credit Notes Payable** for the remaining balance as it represents a liability that will be paid off in the future.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8122812a-2616-4d75-953b-7d6c70377add%2F6b7c0699-8aeb-4b41-bf27-e91e01595946%2Fkl5kq6c_processed.jpeg&w=3840&q=75)
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