Which of the following is correct when land costing $20,000 is sold for $29,000? The land was a component of property and equipment on the balance sheet.
A)Revenues are debited for $29,000.
B)Cost of goods sold is credited for $20,000.
C)Gain on sale of land is credited for $9,000.
D)Operating income increases $29,000.

Question

Quizplus · Accepted Answer

When land is sold, the gain on the sale is calculated by subtracting the cost of the land from the selling price. In this case, the land cost $20,000 and was sold for $29,000, resulting in a gain of $9,000. Therefore, the gain on sale of land is credited for $9,000. Revenues and cost of goods sold are not applicable in this scenario as the land was not a product being sold. Operating income may increase, but this cannot be determined solely based on the information given.

Which of the Following Is Correct When Land Costing $20,000