Purchase And Sale of Land & Building Journal Entry

Purchase and Sale of Land & Building, which is a Non Current Asset / Fixed Asset, depends upon the purpose for which this Asset is purchased and sold. If the purpose of purchase and sale of land & building is to used it in the business, then it is considered as Fixed Asset. but if the purpose of purchasing and selling of land & building is not to use in the business bur for resale purposes, the it is called Goods Purchased or Purchases and Goods Sold or Sales in Accounting.

1. Purchase and Sale of land And building Journal Entries ( For Use in the business)

When Land & building Purchased for Cash for use in the business, then 

                                                    Land & Building a/c  XXX

                                                                                    Cash a/c  XXX

                                                (Land & Building Purchased For Use In Business)

When Purchased on Account or Credit, then

                                                   Land & Building a/c  XXX

                                                                                   Accounts Payable a/c  XXX

                                                       (Purchased Land & Building On Account)

When there is a sale of land & building which was previously used in the business, then

Accumulated Depreciation - Land & Building a/c  XXX

                                                             Cash a/c  XXX

                                                                          Land & Building a/c  XXX

                                                                         Gain on Sale of Land & Building a/c  XXX

                                                       (Gain On Disposal of Land & Building)

If land & building sold on Credit, then we debit Accounts Receivable / Debtor Account instead of cash account on the disposal or sale of land & building.

2. Purchase And Sale of Land & Building (For Resale Purposes)

When land & building purchased for cash, then

                                                                   Purchases a/c  XXX

                                                                                         Cash a/c  XXX

                                                               (Purchased Goods For Cash)

When land & building purchased on Account or Credit, then

                                                              Purchases a/c  XXX

                                                                                   Accounts Payable a/c  XXX

                                                               (Purchased Goods On Account)

When land & building sold for cash, then the journal entry would be as follows:

                                                                        Cash a/c  XXX

                                                                                     Sales a/c  XXX

                                                                (Goods Sold For Cash)

If land & building sold on Account / Credit, then

                                         Accounts Receivable a/c  XXX

                                                                                Sales a/c  XXX

                                                            (Goods Sold On Account)

  

So, these are the journal entries related to the purchase and sale of land & building in accounting.

Question:

If Land & Building Purchased And Part Payment Was Done. What Will Be The Accounting Entry?

Let's say, land and building purchased for $50,00000 and only 10,00000 paid in cash and rest was on account, then we record the following entry as shown below:

                    Land & Building a/c  $50,00000

                                                                Cash a/c $10,00000

                                 

                                                                 Accounts Payable a/c  $40,00000

                                 (Land & Building Purchased But Partially Payment Made)