Multiple Choice
Corona Industries purchased a stamping machine on January 2, 2011, for $100,000. It paid $20,000 down and financed the balance over 5 years at State Bank. Terms of the loan were 10% interest payable on December 31 each year with a required $16,000 principal payment. 2014 proves to be a difficult year and on December 1, Corona negotiates a debt restructuring with State Bank. The settlement calls for cash payment of accrued interest plus $4,000 on December 1 and the transfer of 200 acres of land held by Corona that cost $15,000. The land has a current market value of $22,000.
-Which one of the following entries will Corona make to adjust the land just prior to transfer?
A)
B) DR Loss on disposal of asset 7,000
CR Land 7,000
C) DR Land 7,000
CR Gain on disposal of asset 7,000
D) DR Note payable-State Bank 7,000
CR Gain on disposal of asset 7,000
Correct Answer:
Verified
Correct Answer:
Verified
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