Purchase And Sale of Land & Building Journal Entry

Purchase and Sale of Land & Building (L & B), 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 L & B is to used it in the business, then it is considered as Fixed Asset. but if the purpose of purchasing and selling of L & B 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 L And B 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

                                                (L & B Purchased For Use In Business)

When Purchased on Account or Credit, then

                                                   Land & Building a/c  XXX

                                                                                   Accounts Payable a/c  XXX

                                                       (Purchased L & B 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 L & B)

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

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 L & B 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

                                 (L & B Purchased But Partially Payment Made)