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Julie transferred a building with an adjusted basis of $240,000 for another building with a fair market value of $350,000 and $25,000 in cash.

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akiran007

Answer:

New Building. $ 350,000 (debit)

Cash. $ 25,000 (debit)

Old Building. $ 115,000 (credit)

Profit & Loss Account $ 240,000 (credit)

Explanation:

The adjustment was made for $240,000 to P&L account and the old building was exchanged with new building if $350,000 with cash $25,000.

This is the required entry to be made.

New Building. $ 350,000 (debit)

Cash. $ 25,000 (debit)

Old Building. $ 115,000 (credit)

Profit & Loss Account $ 240,000 (credit)

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