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What is the journal entry for sale of a fixed asset, including payoff of a mortgage loan and net gain on the transaction?

We paid $65,900.00 for a rental home, put 3,650.00 capital improvements on it, and sold it for 82,000.00. We had a mortgage 45,000.00 on it that was paid off when we sold it. I'm stuck on how to record the sale of this asset, showing the closing cost and net gain on this journal entry. In which type of account do I record the net gain? 

Is it like this? What am I doing wrong?

Mortgage Payable    debit 45,000.00

Closing costs            debit    6,000.00

Cash account            debit  31,000.00

Our Rental Home                                                          credit  65,900.00

Capital Improvements                                                 credit     3,650.00

Net gain                                                                                        12,450.00

Thank you for your help.

  

Solved
Best answer 12-10-2018

Accepted Solutions
ProAdvisor

In which type of account do I record the net gain?  Acc...

In which type of account do I record the net gain? 

  • Account Type = Other Income*
  • Account Name = Sale of Fixed Assets


* Or just regular income account type. It depends upon advice you may get from your CPA or Tax Accountant.

View solution in original post

6 Comments
ProAdvisor

In which type of account do I record the net gain?  Acc...

In which type of account do I record the net gain? 

  • Account Type = Other Income*
  • Account Name = Sale of Fixed Assets


* Or just regular income account type. It depends upon advice you may get from your CPA or Tax Accountant.

View solution in original post

Established Community Backer ***

We don't know your entity type. We don't know how long yo...

We don't know your entity type. We don't know how long you owned this property. We don't know what your prior tax years reported for depreciation. We don't know your adjusted basis.

 

We don't know enough to help with this tax rule question.

 

You really need the guidance of your CPA for what the values are going to be for which part of the activity.

Not applicable

How do you show sale of a trading business in the account...

How do you show sale of a trading business in the accounts for the last year of the business
Established Community Backer ***

What is a "trading" business?

What is a "trading" business?
Established Community Backer *

Re: What is the journal entry for sale of a fixed asset, including payoff of a mortgage loan and net gain on the transaction?

You are close.  Start out with crediting the original purchase price.  Credit improvements if you capitalized these.  Credit any depreciation taken.  Debit the loan balance.  What ever is left over is gain or loss on the sale.

Not applicable

Re: What is the journal entry for sale of a fixed asset, including payoff of a mortgage loan and net gain on the transaction?

Whatever I understand is, Debit the loan (if any) Debit Accumulated Depreciation (up to date of Sale), Debit the Sale Proceeds received, Credit Historical Value (Original Cost), Credit Improvement Exp (if any), Credit Selling expenses if any. The difference may be Gain or Loss. If Gain then Credit and if Loss, then Debit.

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