Mama June Pizza Company sold land costing $39,000 for $51,000 cash.Which of the following statements concerning the land sale is correct?

Question

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The sale of land resulted in a $12,000 increase in operating income. This is because the company only paid $39,000 for the land, but sold it for $51,000, resulting in a profit of $12,000. The land account would be credited for the cost of the land, $39,000, and the revenue account would be credited for the sales amount, $51,000. However, neither of these options is the correct answer because they do not reflect the increase in operating income. Income before income taxes would also increase, but by an amount that is dependent on the company's tax situation.

Mama June Pizza Company Sold Land Costing $39,000 for $51,000