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Erik-Davila
Level 2

Help on JE Sale of Building and land

Hello group I, will like to ask for your help as I'm a little bit or much confused about this entry.

The company is a C-Corp and building has been on the company for more than 4 years

Cash 616,374.29  
Texstar 319808 670,935.97  
Building  1,128,960.00 
Land  124,500.00 
Accumulated 73,569.00  
Gain on sales 96,770.10  251,109.00 
Taxes Expense 28,527.97  
Rent Income 11,791.67  
Security Deposit Liability 6,600.00  

                                                 1,504,569       1,504,569

 

This is how I picture the entry myself

 

he received on the bank only 616,374.29

received and pay off a loan of 670,935.97

 

Building is 1,128,960 and land is 124,500

Accumulated depreciation              73,569   =  1,128.960 +,124500 - 73,569 = 1,179,891

 

I'm very confused about the other expenses as commission, taxes, policy premium, and other fees

 

Sales price   1,431,000.00
R4imbursement           1,623.75
Rent prorations         11,791.67
transfer securities           6,600.00
taxes county         28,527.97
commission         85,860.00
closing               450.00
tax certificate                 44.00
guaranty fee                    2.00
owners policy premium           7,441.00
ammendment of survey           1,116.15
e-recordings                    3.20
recording fees                 30.00
Texsatr loan payoff       670,935.97
warranty deed               200.00
Cash Received

       616,374.29

 

 

If someone will be very kind and guide me I will appreciate 

 

Thank you

2 Comments 2
john-pero
Community Champion

Help on JE Sale of Building and land

Here https://smallbusiness.chron.com/record-journal-entry-sale-business-property-42433.html is a simplified explanation

 

To calculate gain or loss,, Debit the sales price by recording everything that was received, and paid for on your behalf. The sum of loan payoff plus selling expenses which include the commission and other closing costs plus cash should equal that sum. This is all step 1 in the link. Step 2 debits Accumulated Depreciation

 

Step 3 credit the original basis

 

Step 4 is a simple calculation but not an entry in the journal entry.

 

Step five, after recording all receipts and depreciation recapture, is to balance the columns such that you are recording a credit =gain or a debit =loss 

 

Your second table , below the sales price, are your initial debit entries in Step 1 that add up to the sales price. Step 2 debits the accumulated depreciation. What you list as debit gain is simply the sum of the other closing costs from the second chart.

The gain itself is the 251109, which will be taxed at long term capital gain rate.

 

Planning ahead and not taking possession of the cash temporarily could have allowed you to take advantage of 1031 exchange but the proceeds have to be held in trust, just keep that in mind for your next sizable gain event

Erik-Davila
Level 2

Help on JE Sale of Building and land

Thanks for the Help. I was confused and didn't know how to figure it out.

 

this is what I did with your advice and came out to have the same amount of 251K

 

Cash                                         1,431,000.00 
License and Permits                                                  1,623.75 
Rental Income                                               11,791.67 
Rental Income Advanced                                                  6,600.00 
Taxes                                               28,527.97 
Commission                                               85,860.00 
Office Expense                                                     450.00 
Office Expense                                                        44.00 
Office Expense                                                          2.00 
Insurance                                                  7,441.00 
License and Permits                                                  1,116.15 
Office Expense                                                          3.20 
Office Expense                                                        30.00 
Texstar Loan                                              670,935.97 
Office Expense                                                     200.00 
Cash          814,625.71
Accumulated Depreciation                                               73,569.00 
Building      1,128,960.00
Land          124,500.00
Gain/Loss          251,109.00

 

Also, for the question of plan ahead of time, this is a new client and I advised him to plan and let me know ahead of time but unfortunately, he did it and I just saw the deposits and transactions once he provided all documentation, couldn't do anything.

 

Thanks and have a great day

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