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5. On April 1, Sunny Day sold the following: her car for $5,000 (basis $7,000) and...

5. On April 1, Sunny Day sold the following: her car for $5,000 (basis $7,000) and her truck for $5,000 (basis $3,000). Explain and show calculation.

6. On April 1, Sunny Day exchanged land (fmv $50,000, basis $30,000) for land worth $45,000 and cash of $5,000. Explain and show calculation.

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Answer #1

5- On April 1 She Sold Car on which She has inccured a loss of 2000(5000-7000) because her Car value was 7000 and she has sold for 5000.

On Truck She has gained 2000(5000-3000) because She has sold for 5000 and that asset book value was 3000

Journal Entry would be

Date Particular Debit Credit
April 1 Cash 5000
Loss on sale 2000
Car 7000
April 1 Cash 7000
Truck 5000
Gain on Sale 2000

6- On April She has Exchanged A land the Value of New land is $45000 and She has also Received a cash $5000 and in return She has a land which is on her book costed her 30000 remaining $20000(50000-30000) will be gain on sale

Date Particular Debit Credit
April 1 Land(New) 45000
Cash 5000
Land(Old) 30000
Gain on Sale 20000
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