DD Ltd Buys a Block of Land from BB Ltd

question 17

Multiple Choice

DD Ltd buys a block of land from BB Ltd by paying $95 000 cash and transferring a piece of equipment to BB Ltd.The equipment is recorded in DD Ltd's at $45 000 and it has a fair value of $55 000.DD Ltd pays $25 000 in estate agent's fees to arrange the transfer.Show the journal entries to record this transaction.

• A)\(\begin{array}{llc}
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Land } & 175000 & \\
• \text { Bank } & 120000 & \\
• \text { Equipment } & & 55000
• \end{array}\)
• B)\(\begin{array}{llc}
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Land } & 140000 & \\
• \text { Bank } & 95000 & \\
• \text { Equipment } & & 45000
• \end{array}\)
• C)\(\begin{array}{llc}
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Land } & 165000 & \\
• \text { Bank } & 120000 & \\
• \text { Equipment } & & 45000
• \end{array}\)
• D)\(\begin{array} { l l l }
• \text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\
• \text { Land } & 175000 & \\
• \text { Bank } & 120000 & \\
• \text { Gain on sale of equipment } & & 10000 \\
• \text { Equipment } & & 45000
• \end{array}\)

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