contestada

Taylor Company received a gift of land and building from the town of Saunderstown as an inducement to relocate there. The land and buildings have fair values of $39,000 and $395,000. Prepare the appropriate journal entry for this transaction.

Respuesta :

Samawati

Answer:

See below

Explanation:

The donation will increase the assets and the owners' equity.  Land and building are assets. An increase in assets is debited.

Donations received are equivalent to 'income' to the business. They add to equity. An increase in equity/capital accounts is credited.

The journal entry will be

Land A/c    DR. $39,000

Building A/c  DR.$395,000

Donations received A/c  CR.$434,000