Question

On April 1, 2020, Pharoah Company received a condemnation award of $516,000 cash as compensation for...

On April 1, 2020, Pharoah Company received a condemnation award of $516,000 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $72,000 and $336,000, respectively, when they were acquired. At April 1, 2020, the accumulated depreciation relating to the building amounted to $192,000. On August 1, 2020, Pharoah purchased a piece of replacement property for cash. The new land cost $108,000, and the new building cost $480,000. Prepare the journal entries to record the transactions on April 1 and August 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1 Aug. 1

Homework Answers

Answer #1

Date

Particulars

Debit ($)

Credit ($)

April 1

Cash

516,000

Accumulated Depreciation – Building

192,000

    Land

72,000

    Building

336,000

    Gain on Sale of Assets (Bal. Figure)

300,000

(Profit on Sale of Assets along with cash as condemnation award)

August 1

Land

108,000

Building

480,000

    Cash

588,000

(Purchase of Replacement property for cash)

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