Here's my scenario that I need help with. Thank you in advance.
We have land valued at $600,000. There was a structure but because it's so broken down, it accounts for $0. Trespassers came and set the structure on fire and the insurance paid out $600,000. Since land itself does not get depreciated, we don't record that. However, there is a balance on the loan of $553,158 with interest accrued up to payment was $1244. The bank refunded us the difference of $45,597.
Here's how I have my journal entry written up:
Loan Payable - debit $553,158
Interest expense - debit $1,244
Cash - debit $45,597
Fire Damage - Credit $600,000
What do I do from this point and what type of account is the Fire Damage (I'm assuming OTHER INCOME). Thanks!