What are the effect of the sale and the payoff of the loan

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Question:- A parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. At the time of the sale, assume that the seller still owed $30,000 to the bank on the land that was purchased for $85,000. Immediately after the sale, the seller paid off the loan to the bank.

What are the effect of the sale and the payoff of the loan on the accounting equation, i.e. what are the increases and/or decreases in assets, liabilities, and owners' equity?

 

 

Reference no: EM13116524

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