Bill Is Considering Two Options for Selling Land for Which

question 23

Essay

Bill is considering two options for selling land for which he has an adjusted basis of $80,000 and on which there is a mortgage of $75,000.Under the first option, Bill will sell the land for $170,000 with a stipulation in the sales contract that he liquidate the mortgage before the sale is complete.Under the second option, Bill will sell the land for $95,000 and the buyer will assume the mortgage.Calculate Bill's recognized gain under both options.

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Definitions:

Salaries Expense

This refers to the total amount paid by a company for employee salaries over a specific period, recorded on the income statement.

Trial Balance

A bookkeeping worksheet listing the balances of all ledgers in two columns, debits and credits, used to verify the equality of the two totals.

Cash Dividend

A payment made by a company to its shareholders, typically in the form of cash, out of its profits or reserves.

Journalize

The process of recording transactions in a journal, marking the first step in the accounting cycle.