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Level 1

Journal Entry for sale of real estate tied to a business loan (real estate & equipment)

sold real estate that was home to business.  I will be renting instead.

Purchase price of real estate:  $100,000

Balance on original Loan:  $350,000

Sale of real estate:  $410,000

Closing Costs:  $35,000

Proceeds from sale of asset: $$25,000

Need help how to do a journal entry for this transaction.

Thank you!

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Level 15

Journal Entry for sale of real estate tied to a business loan (real estate & equipment)

The real estate should have been carried as a fixed asset, something like this
fixed assets:
123 some street
>> land:
>> building:
>> >> accum. depreciation building:

1. calculate and post partial year depreciation on the building (land is never depreciated)
2. create an income account called gain/loss on asset
3. journal entries

debit accum. depreciation building for the balance in the account, credit gain/loss
debit gain/loss, credit building fixed asset account for the balance in the account
debit gain/loss, credit land fixed asset account for the balance in the account

 

then use make deposits and in the other deposits section
bank account where you deposited the profit, 410K
loan liability account, -350K (negative 350K)
gain/loss account, -35K, (negative 35K)

deposit will net to 25K as it should, the liability account will be zero.

 

You say "& equipment"

If the equipment was also a fixed asset, the same things need to done for the journal entries in steps 1 & 3, for each one

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