In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively.During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash.The entries in the reconciling columns of the worksheet will include a:

Question

Quizplus · Accepted Answer

CThe correct answers are A and C. In A, the sale of land for $50,000 is correctly classified as an investing activity, with a credit to Land and a corresponding debit to Sale of Land. In C, the net change in the Land account is a debit of $42,000 ($240,000 ending balance - $198,000 beginning balance - $50,000 from the sale + $92,000 purchase), which reflects the net cash spent on land transactions, correctly classified under investing activities. B and D are incorrect because the purchase of land is an investing activity, not a financing activity, and the sale of land is also classified under investing activities, not financing activities.

In the Garnet Company, the Beginning and Ending Balances in Land